Helping business prosper Part 1
1. My initial approach is low-key, disarming, and intended to gain clients’ confidence that I am with them to help them for as long as they wish me to be with them.
2. I ask about their background in a personal way, without being obtrusive. This discussion would venture into their family situation. I believe that this knowledge is helpful in offering counselling in relation to their business.
3. My first inquiry business-wise is always directed to profitability of their operation. This is for a number of reasons: (a) I become aware of the depth of difficulty that I, and they, are facing. (b) It gives an indication of how solvable the position is. (c) It gives a very accurate situation of where the business is, its operation, and its strengths and weaknesses. (d) The name of the game is invariably profit because the life of the business is almost entirely dependent on this aspect. No profit invariably means no business. (e) It clearly shows the elements of sales percent, gross profit, expense levels and pinpoints weaknesses and strengths and where to concentrate. (f) It gives me a very quick, fairly clear picture of the business itself. (g) It shows me whether the client understands the concept of profit by a study of the profit and loss statement – often the P & L statement contains data which is in effect not part of a trading P & L statement. It therefore gives a false indication of where the business is and may lead to false efforts to restore the business to profitability. (h) The initial analysis of how to improve business performance starts with this profit and loss statement. (i) Ideally the Annual Profit and Loss Statement prepared by the business accountant is the statement on which to operate. However, if an up-to-date accountant’s Trading Profit & Loss Account is not available, appropriate questions can be put forward which will enable a picture to form of the profitability of the business. All of the above relates to the profitability aspect of the business, but from this information a fountain of queries will result and the path formed to be followed to restore the business to a satisfactory level of performance. One successful business for example: shop drawings. They were a client of mine that have been running for 3 years now
4. Personnel It is important to get a clear picture of how the business operates and the most important aspect of this is to assess the people who are responsible for the running of the business, their skills, their weaknesses etc. Here is an example of a site to give you more information.
5. The Market Great emphasis should be placed on this sector of the business for if there is no market, or there is a shrinking market the task is so much harder. Most things can be aided or redirected. However, the marketplace is very much the responsibility of the current operators – it may be possible to assist in improving the market or finding a market for the business products but this is usually a specialised area and the province of existing operators. However, an in depth assessment of the marketplace will help a better understanding of the operation and the direction in which the business should be heading. A study of product mix is important and in a majority of cases 80% of sales are obtained from 20% of product mix. Some products may be better deleted as their contribution to profit is minimal or not advantageous to business performance.