How To
Read Your Business Condition
By Tom Egelhoff
 When you see a health professional, they usually
order a series of tests to evaluate your health condition. They
use these test results to either give you a clean bill of health
or to alert you to any conditions that may require treatment
or medication.
There are also tests that you can do which
will also tell you the health or sickness of your business.
What numbers
are we talking about?
You might think I would want to see your
financial statements. Profit and Loss, Income Statement, Cash
Flow or Tax Returns.
I'll admit that the above will tell me
what's going on with the financial condition of the company but
there are other numbers you need to be aware of that will greatly
effect the above forms if they are ignored. Let's look at some
other numbers.
Start with
gross numbers
Every
business has peaks and valleys of good and bad business. When
I worked with Circuit City Stores®, 75% their weekly business
was done between Thursday and Sunday. I have a friend who sells
custom made
Christmas Santas. Eighty to ninety percent of her business
is done from October to December.
How much business do you do per day, week,
month? Keep track of these totals. They are indicators of marketing
and advertising success or failure. Which brings us to the next
numbers.
Advertising:
How much business do you want to do?
There are many articles on this site that
explore the pros and cons of advertising. For this article we
are interested in the answer to one question. Do you know the
average cost of marketing and advertising in your industry?
If you are spending more than the industry
average, that suggests that you have few loyal customers. If
you have to spend more to bring customers in they are not loyal
to your business. On the other hand, if you spend less than average
on advertising that might suggest that you do have very loyal
customers.
The next advertising question is, where
do you want your business to go? If you want to grow the business
then a reevaluation of your advertising goals are in order. Advertising
with the right message in the right place produces customers.
Advertising is an investment not an expense. If your advertising
is paying for itself, and producing paying customers, an increase
should produce more customers and higher profits. To increase
your business by $50,000 per year with three employees working
22 days each month, each employee would only have to generate
$63.00 more each day than they are producing now.
Which brings us to my next point:
Are your
employees trained to produce?
So, you increase your advertising, bring
in more customers to a sales staff that can't handle the increased
traffic. You end up alienating new customers instead of making
loyal friends. Trained people can produce that extra $63.00 that
advertising brings in.
Your customers can purchase products or
services just like yours at your competitors business. They buy
where they feel that knowledgeable people can help them. They
also buy where they are comfortable with the image that business
projects. Which brings us to:
How do
you look to your customers?
As mentioned above, customers buy where
they feel comfortable. If you are an attorney, do you have new
furniture styles in your waiting room? Are the carpets clean?
Are there scratches in the woodwork? What impression are you
giving to the customer. Success and prosperity or penny-pinching
and cheap? Provide the best looking business you can afford and
the bottom line will reflect the effort.
Your customers appreciate a pleasant purchasing
environment...so do your employees. Remember the $63.00 per day
discussed earlier? Employees will produce more with positive
working conditions. Are your employees proud of where they work?
What do
you know about your customers?
If you've ever received a credit card bill,
it probably contained an offer for a product. Do you think everyone
who gets a bill gets the same offer for the same product? No,
they don't. The offer you receive is based on your income, past
purchases, geographic area and other demographic information
collected by the credit card company.
What kind of information are you keeping
on your customers? Could you easily pull out a specific group
of customers and send a mailing just to them? What do you really
know about your customers buying habits? If you're like most
small business owners...not much. Start compiling all the information
you can about your customers, any way you can. Surveys. Focus
groups. Seminars.
The Last
Word On Your Business Condition
Finding information about customers is
not an easy task. Have you ever visited some ones house who had
ugly carpets that didn't match their ugly furniture and wanted
your opinion? Were you brutally honest with them, or did you
tell them how much you admired their taste?
Business owners tell me day after day,
"I know my customers, they tell me what they don't like."
My question is, "Did they also tell you they didn't like
your carpets and furniture?" Customers may not always be
honest with you in face-to-face interviews.
Find other non-threatening ways to get
information from them.
(Main
Menu)
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your
Business Or Service In A Small Town, and The
Small Town Advertising Handbook: How To Say More And Spend Less.
He is also a seminar and workshop presenter
and trainer. He may be reached at 888-550-6100 or PO Box
271 Bozeman, MT 59771-0271
This article may be reproduced
for your non-profit group or organization provided it is not
altered in any way
and the following is attached:
Used With Permission
©1999-2002 Eagle Marketing PO Box 271 Bozeman, MT 59771-0271
http://www.smalltownmarketing.com - (406) 585-0219 - Toll FREE
(888) 550-6100
email: tommail@smalltownmarketing.com
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