Last week in Part one the focus was the pervasion of negativity that affects consumerism and ultimately the results in a retail or service based operation. We alluded to the key element points of a contingency plan to zero in or to diminish the profitability of your business despite the downturn in revenue. Please refer to Part one of Tough Times = Tough Measures, published on Tuesday, September 14th!
Now for the key elements :
Financial:
Operating expenses are usually the first area that need to be reduced to counter the losses in revenue. Each expense that is reduced needs to be carefully considered in terms of the affect the reduction will have on current results or long term implications. For instance, reducing staff to cut payroll may increase the workload of the remaining staff to the point that service suffers or customer theft may skyrocket and possibly customers will not purchase due to lack of an attentive staff! “Avoiding taking markdowns” of aged or slow moving merchandise is another expense that could have a detrimental affect on inventory levels (slow moving) of sales due to the lack of appeal of merchandise due to lack of value at current prices!
Service:
As anyone that has worked with me or read my past offerings knows, I put a high degree of profitability on service as a “intangible product” in all businesses! My position is that service must improve during tough times or as an aspect of any contingency plan. Service, not only as executed at the sales level, but service as it is offered to your business from your suppliers! Retailers must present themselves as valuable to the community by being visible in events of community interest both social and charitable events. Service at the store level must become a high priority with all associates not to preclude additional training and emphasis on a customer by customer basis. Good service leads to increased sales as well as future customer loyalty affecting the long term. If wage reductions become necessary, it should be known, not as a threat, but as awarenesses to staff members that associates with high productivity and positive customer feedback will remain employed! Tough, but nonetheless necessary when tough times
prevail! Improved service from suppliers might include, shorter delivery times on new goods, increased discounts on future orders, extended payment terms, markdown assistance on slow moving merchandise to name a few! Realistically, suppliers need you stay in business and are generally receptive to working with a retailer when asked, as they need you as much as you need them. After all, they should be partners in your business!
Strategy changes:
Most strategies were carefully thought out at the genesis of the business and when times were favorable to enter the marketplace or the business would not have been born! With less business to garner, the way business is done may need redefining. Perhaps the target market for the product line offered has changed and the approach to allure the customer to the business has remained the same. (i.e. advertising using the same media attractive to the original core customer even though the customer has changed) Locations may have lost their desirability due to a population shift, or loss of retail neighbors and it may be necessary to reevaluate locations and close the undesirable ones and consolidate operations. Perhaps the product mix as it relates to the macro categories has shifted dramatically in sales versus inventory levels. In this case it may be necessary to eliminate or pare back certain categories by taking dramatic price action and increasing inventory and visibility of the successful categories. The same action may be required as it relates to brands or even suppliers with poor revenue and income results!
I realize that many of the examples presented were as a scenario for businesses currently realizing tough times and possibly failure. However, the thought behind this directive is to bring to your attention to those things that should be part of a proactive written plan (secondary plan) to allow a business to be proactive. I am convinced that pro activity can save a business that has realized “tough times” and possibly resurface from those tough times unscathed and much stronger as a result! The ideas presented are very abstract. If further definition is needed, I can be contacted and have the resources and experience to provide details on a contractual basis!
My wish for all past clients or friends that read this is that they are blessed with positive revenue and income! However, I remind you that a contingency plan and mentality should be a part of your plan for your success and your business to exist in perpetuity!
Randy Snyder is a regular writer for Salesheads and has over 35 years combined experience consisting of executive positions in national specialty chains and retail business consulting. He can be reached at rsnyder921@aol.com or (p) 828 625 4932.
Now for the key elements :
Financial:
Operating expenses are usually the first area that need to be reduced to counter the losses in revenue. Each expense that is reduced needs to be carefully considered in terms of the affect the reduction will have on current results or long term implications. For instance, reducing staff to cut payroll may increase the workload of the remaining staff to the point that service suffers or customer theft may skyrocket and possibly customers will not purchase due to lack of an attentive staff! “Avoiding taking markdowns” of aged or slow moving merchandise is another expense that could have a detrimental affect on inventory levels (slow moving) of sales due to the lack of appeal of merchandise due to lack of value at current prices!
Service:
As anyone that has worked with me or read my past offerings knows, I put a high degree of profitability on service as a “intangible product” in all businesses! My position is that service must improve during tough times or as an aspect of any contingency plan. Service, not only as executed at the sales level, but service as it is offered to your business from your suppliers! Retailers must present themselves as valuable to the community by being visible in events of community interest both social and charitable events. Service at the store level must become a high priority with all associates not to preclude additional training and emphasis on a customer by customer basis. Good service leads to increased sales as well as future customer loyalty affecting the long term. If wage reductions become necessary, it should be known, not as a threat, but as awarenesses to staff members that associates with high productivity and positive customer feedback will remain employed! Tough, but nonetheless necessary when tough times
prevail! Improved service from suppliers might include, shorter delivery times on new goods, increased discounts on future orders, extended payment terms, markdown assistance on slow moving merchandise to name a few! Realistically, suppliers need you stay in business and are generally receptive to working with a retailer when asked, as they need you as much as you need them. After all, they should be partners in your business!
Strategy changes:
Most strategies were carefully thought out at the genesis of the business and when times were favorable to enter the marketplace or the business would not have been born! With less business to garner, the way business is done may need redefining. Perhaps the target market for the product line offered has changed and the approach to allure the customer to the business has remained the same. (i.e. advertising using the same media attractive to the original core customer even though the customer has changed) Locations may have lost their desirability due to a population shift, or loss of retail neighbors and it may be necessary to reevaluate locations and close the undesirable ones and consolidate operations. Perhaps the product mix as it relates to the macro categories has shifted dramatically in sales versus inventory levels. In this case it may be necessary to eliminate or pare back certain categories by taking dramatic price action and increasing inventory and visibility of the successful categories. The same action may be required as it relates to brands or even suppliers with poor revenue and income results!
I realize that many of the examples presented were as a scenario for businesses currently realizing tough times and possibly failure. However, the thought behind this directive is to bring to your attention to those things that should be part of a proactive written plan (secondary plan) to allow a business to be proactive. I am convinced that pro activity can save a business that has realized “tough times” and possibly resurface from those tough times unscathed and much stronger as a result! The ideas presented are very abstract. If further definition is needed, I can be contacted and have the resources and experience to provide details on a contractual basis!
My wish for all past clients or friends that read this is that they are blessed with positive revenue and income! However, I remind you that a contingency plan and mentality should be a part of your plan for your success and your business to exist in perpetuity!
Randy Snyder is a regular writer for Salesheads and has over 35 years combined experience consisting of executive positions in national specialty chains and retail business consulting. He can be reached at rsnyder921@aol.com or (p) 828 625 4932.
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