business mentoring
with Rod Richards, Business Enterprise Centre
Let’s Build Business Momentum We know that starting and operating a business is demanding. In growing economic cycles hard work is rewarded by growth and profit. When economies are flat or trending to stagnate or feel recessionary the business cycle is made doubly tough. Business can make all the right moves, deliver high level enthusiasm, relevant products and still struggle to remain viable. Customer’s confidence always holds the key. Now more than ever consumer behaviour and spending swings are unpredictable. Media reports, world events and personal circumstances greatly impact our behaviour as consumers. Even Christmas time is not immune from changed behaviours of purchasing and spending less. Customer sentiment and confidence has clawed back from negative territory to neutral 100 index points, for the first time since 2013. So let’s keep this momentum. There are some key areas where business can ensure they are atop the viability curve and not drifting backward when consumer confidence evaporates and spending stalls: Review Margins. The greatest profit driver is healthy margins. What are your business best five product margins and what is this average. Do you know your key margins for: cost of sales, gross profit, expenses to revenue, wages to revenue. Benchmarking and review of industry standards will identify problems. There is plenty of data to compare your business model performance with similar industry operators. Sample below – Industry average (ATO) BUSINESS
GROSS PROFIT
COST GOODS
EXPENSES/ REVENUE
WAGES / REVENUE
Coffee shop
61%
39%
84%
21%
Clothes retail
49%
51%
83%
16%
Mechanic
72%
28%
56%
28%
Know your Break-even Analysis. Understanding break-even is empowering. Every business person should know this simple tool. Don’t leave this to your accountant. Break-even is what business live and perish by. Sales targets are determined and set by reference to break-even otherwise business is guessing and have no benchmark for sales staff performance. A simple example; if business average unit sale $86.00, with margin 51 per cent monthly expenses of $5,300/month what is the break-even? The answer is sales of $10,392.00 or 121 units. Marketing Message. Marketing is everything you do. Your attitude, personal presentation, merchandising styles, phone manners, email signature, vehicle signage/condition, business cards and online sites/ presence all contribute marketing messages. Marketing is investing in awareness building and brand identification. But what is your message? What is the compelling value proposition business message? Are the business values and authenticity communicated in an understandable jargon free mantra. If not, it’s time to get one. In the clutter of competition, what will make your business and offering stand out? To create a powerful value proposition research customer insights and how competitors solve customers’ pain. Then ask what do we do. Why do we do what we do and does this fit our market providing real value.
Rod has 27 years’ experience as a company owner, director and entrepreneur, and 10 years as a Business Mentor and educator. He is a founding Director of the Business Enterprise Centre Sunshine Coast and Queensland Director of BEC Australia (non-profit Network). ca 1300 133 058 // www.businessenterprisecentresunshinecoast.org.au
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Why contact the Start Fresh Finance team?
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and friendly service.”
Ben Reiss – BTE Excavations
Jen & Paul O’Shea - NSW
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