This section provides some strategies which might help improve your firm’s performance. The lists do not cover all objectives, or all options, but may help show some suitable techniques.
While reviewing this material, it may be worthwhile to consult with partners, senior staff members, your accountant or banker. These people can all make some contribution, based on their special skills and knowledge of your firm.
After considering the other views expressed, decide promptly and act immediately.
Increase the number of customers
Effective advertising, particularly during non-sale times;
Regular in-store displays and demonstrations;
An accessible and convenient location;
Effective, hard-working sales and customer service staff;
Referrals from existing customers.
Increase the average sales size
Selling higher quality or enhanced features;
Stock/ sales mix;
Accessories or add-ons.
Increase repeat trade from customers
Staff attitude and friendliness;
Staff sales ability;
Business image/ appearance/ housekeeping;
Provide high quality service.
Improve your gross profit
Keeping key objectives in mind will help you get the most from the benchmarking process.
Prevent closing stock being less than it should be through factors such as:
Shoplifting of minor items;
Staff pilferage of minor items;
Damage while stock is in storage or on display;
Stock received not checked against delivery dockets or invoices;
Damaged stock not returned.
Eliminate high cost purchases
Too many small orders with high freight costs;
Too many suppliers so no quantity discounts (no stock rationalisation);
Not taking advantage of settlement discounts (where they are worthwhile);
Not planning purchases.
Avoid depressed total sales from the level of stock sold by correcting:
Poor pricing (inaccurate cost prices or excessive and unauthorised discounting);
No re-pricing (on old lines/ after a promotion);
Poor sales mix (not enough sales of higher margin lines);
Poor merchandising and display.
Reduce and control expenses
The following is a checklist to help reduce and control expenses.
|ChecklistImprove cost controlBudget costs annually;|
Review costs against budget regularly;
Is each expenditure item necessary?;
Look for better or less-costly ways of operating the business.
Improve stockturn and reduce stock investment
Set up a stock control system;
Ruthlessly eliminate dead stock;
Can stock holdings for individual product lines be reduced?;
Monitor monthly sales;
Monitor monthly purchases;
Compare with budgets and adjust for future months to avoid overstocking.
Reduce debtor levels
Establish payment terms as part of the price negotiation;
Carefully review each request for credit;
Prepare statements on time;
Prepare aged list of debtors monthly;
Consistently phone or visit late payers;
Immediately stop account when overdue;
Take legal action early.
Each firm has its own set of objectives. Your objectives may not correspond exactly to the major goals outlined above. It may be that other objectives (such as growth, or improved lifestyle) are relevant.
Major benefits can be obtained after spending time identifying the reasons for differences between your result and relevant sets of averages.