To the New World
Under a Microscope
Just as there is more to sailing than wind, water and a boat, guiding your company through the turbulent economy takes more than top-notch customer service. A business needs to be streamlined and efficient—there can be no dead weight or loose rigging if it’s expected to make it across the ocean.
To address such technical concerns, Gary Rago, CPA, MBA, director of the New Jersey Small Business Development Center at Rutgers University in Camden, N.J., stressed companies need to examine their inner workings to pinpoint weaknesses. “Analyze your company’s products and/or services to address inefficiencies and under-performing areas,” he said, advocating that businesses calculate their sales by each product or service, as opposed to a raw sales total. Rago’s example: If you’re making 80 percent of your sales on just 20 percent of your offerings, then you should re-adjust said offerings accordingly to focus on the more profitable portion.
Once you know what’s making money, you should also check how much money a product or service is actually making per sale. Said Rago, “It’s not always obvious, especially if you do a high volume. Your sales may be high, but you’re not recognizing a high margin on those products, and that’s not a good thing.” Similarly to focusing on high sellers, Rago also recommended targeting products with the highest profit margins. “It’s a matter of taking a close look at what you’re doing [and] shifting resources,” he said.
In the spirit of streamlining operations, Jeff Bowles, co-president of distributorship Proforma Promotionally Yours, Kansas City, Kan., suggested companies take a close look at their supplier relationships and see what can be simplified. “If this is a tough economy, and everybody’s searching for an edge, so are all of our suppliers,” Bowles said. “I’ll have more leverage with the vendors that I use if I send more work to a smaller amount
of vendors,” he explained. Not only does having fewer suppliers to deal with make order management easier, suppliers that get more work will also be more willing to help on large, complex or rushed orders.