Mentorship is your policeman. Coaching is getting you over the finish line. Gavin Tonks on Entrepreneurship 2009
24 Hour Survival Guide for Small Business
ISBN Number:
Barcode: 6009691421372
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Copyright 2009 Gavin Tonks
Author: Gavin Tonks
Date: 16/06/2008
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24 Hour Survival Guide for Small Business
ISBN Number:
Author: Gavin Tonks
Date: 03/03/2009
Dedication: This book is dedicated to those who have chosen the hard road and are taking control of their destiny by being an entrepreneur.
The entrepreneur road is really hard as you need to develop skills and attitudes coupled with experience to tread where angels fear to go.
Some people are blessed with opportunity and an easy road and others like me have not.
I have not only seen the weeds on the edge of the road but have detours which took me into oncoming traffic lanes.
Life is a lesson so learn it, suffer what life brings and enjoy every moment that nature gives “Do not go gently into that good night” and get up everyday to be what you want to be / Do not take prisoners and let us as entrepreneurs become the greatest nation in the world with our creativity and determination embracing integrity humility and creativity as our icons like Nelson Mandela have done.
To make this book more interesting and explain concepts we have linked the information to Enterprise Support www.eneterprisesa.com
Here you will find articles information and plan creators to assist you in developing the array of tools you require to be very successful
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Currently conditions are tough and getting tougher and only the tough will survive!
If electricity, interest rates, rising costs, petrol and all the other negatives are driving you to despair in your business then you need this quick survival guide
Is your business currently a Headache? / Take two of these steps daily and repeat until they become a habit
Here is a list of topics you need to consider for the survival game
Introduction and
Attitude
Perseverance
Believing in your business.
Opportunity
Cast your net around.
Weigh your options
Taking long hard looks.
Use your network
You are always one person away from the one you want or need to know.
Do not be afraid to ask for business.
Your business is giving you a daily dose of Migraine / it is really painful but not yet life threatening
Negotiating with creditors.
Negotiating with debtors.
Cutting costs.
Sharing the burden by making people responsible.
Buy in from staff – Everyone reading from the same page.
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Prozac time / this stage is when you need the power of euphoria to move to a successful business position taking charge of the situation and rising above the problems, creating solutions and sustainable revenue plus enhancing the feel good reasons you went into your own business in the first place.
Do your homework better than ever before
Take an even harder look at the playing field.
Do not take unnecessary risks
“Get rich quick schemes”’ are “Never” the answer.
Stick to the basics
More than ever, Stick to simple solutions (mud before marble).
Stick to knitting
Do what you know best, and do it so well, that you can do it with even your eyes closed.
Your business Plan
Keep everyone informed, especially your banker.
Downgrade wherever possible
Anything not directly relevant to your business or lifestyle - get rid of it - especially if it costs money
Image is not important survival is
Strength does not ensure survival.
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Introduction
The following steps are created to assist you in surviving any tough times.
These attributes and statements have not only given me strength in really dark hours but have proved to be reliable tools in assisting many small businesses I have mentored over the last thirty years.
Attitude.
Above and before all else you need attitude.
First look at your Attitude: Your business is giving you a headache and a fever and you really are fast approaching your wits end, then you need to take a step back, take a breather and plunge right back in but ensure you are armed with information and the necessary strength to carry things through.
You need to really develop positive attitudes and characteristics that will “create” for you strength.
Strength to handle situations and make people believe in your ability to deliver and trust in you as a partner and desired business associate.
Ponder this Quotation: A wolf is not a selfless beast but an animal that has a focus on survival.
The wolf can be alone or part of a pack and when it howls you know its distinctive voice and cannot mistake it for anything other than a hunting predator - Gavin Tonks on taking control of your business.
There are only sheep and wolves in business.
When times are tough wolves are always hungry so “do not become a victim” of your attitude - Sheep are food or a resource.
Not everyone is born a wolf but you can learn to be a wolf, sort of “sheep in wolf’s clothing” until your transformation to wolf is complete.
Please understand the wolf and sheep allegories are attributes and people are comfortable in these roles or not – we are dealing with the transition of the not happy people who want more, who because of their current attitude are not succeeding.
Translated: All business is all about a sale and transfer of money, there are those people in business that give business and those people that take business.
Find out what your business is and do not be ashamed for taking the business you plan to have it is the nature of business.
Learn to be focused on what you “need to get” and what is honestly required for your business – ultimately money in the bank, after everyone is paid and all the parties are satisfied with your work and eventually there is a cash resource [left behind] that belongs to you for your passion commitment and hard work.
Taking business is for wolves and giving for sheep.
Everyone cannot be wolves and there are very successful sheep companies like Microsoft as an example, so an important step is the need to confirm your role and attitude that fits your business.
Negatives that you need to manage in a wolf transition.
Do not get that haunted hunted look as you try and do business
Be positive and know what you want, and how much you want it for
Now is the best time to really look into your business, goals and dreams and plot a path to success, attack the process with passion commitment and energy that comes with your new attitude
In business we all face pressures especially when times are tough so look for relationships with people who can assist your business and save you money as well as bring in greater and more profitable sales
People have their hands full with their own problems and naturally are drawn to other business people who can bring relief to their business or relief from management pressure by being fast efficient and cost effective.
Success is exactly a 50/50 chance - by not being a victim and planning, your odds can be stacked a percentage or two in your favor, damn good odds for any entrepreneur.
The solutions to embracing a wolf mentality and attitude
Further web site learning, tutorials and explanations of business terms and concepts are available at www.enterprisesa.com.
Other topics to research in your path to becoming a peak performing business entrepreneur: Wellness at work web address www.wellness-atwork.co.za
Entrepreneurship is a complicated mix of emotion ability and desire, it is like saying “I want to be in the Olympics”, we cannot all be 100m athletes and out of 6 billion people on this planet there really are only a handful of athletes capable of running the distance, under a minute and only one is the fastest.
But the Jamaicans proved they could compete, made a plan didn’t give up and achieved their goal even made a movie out of it.
A requirement for the growth of sustainable business is a sound small business layer.
In India and China this layer is usually family owned business past down from Parent to sibling, there are so few such business in South African, we can say we lack this layer all together having 3% of businesses controlling 97% of the current business. This may not be relevant to international readers but the importance of your business in any economy cannot be underestimated.
The small business networks in countries like China and India are stable generate millions of US Dollars and effectively market their networks, achieving yearly stability for their business.
Some business have traded for 120 years as family business and we as new entrepreneurs want to compete in 7 days from finance without understanding the principles handed down by generations of entrepreneurs and the stable financial asset bases they have.
If you do not see a long term futures in working for yourself get out now, as you have no idea how tough it is going to get.
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Perseverance: Going the distance.
Perseverance – The power that comes from believing in your business.
An entrepreneur once told me that they really battled in their business, they had sold everything and were still battling and always seemed to be in this tunnel, in the darkness, never thinking they will ever see the light of day again.
They decided the going was just too tough and planned a “cut off day” or exit strategy.
However the new focus on doing things differently and resolving to go the final distance was the catalyst step that took them to where they wanted to be.
They never looked back.
They had stopped chasing rainbows, resigned themselves to their business changed their attitude from desperation to compliance and everyone supported them, the rest was a very successful entrepreneurial business.
The moral was you never know when the next step forward is, that one step that changes your road from difficulty to a path of success. If they had turned back at that point when it was just too much without a plan, they would have lost everything and would not have the successful business they had developed together.
As you plot the way forward you will eventually see that success, is a planned excursion and even those that appear to have fallen into it head first, have planned it for a long or short time, but their was always planning and thought behind the intention to succeed.
You will realize there are no shortcuts if there were you would already be successful
You really have to work hard on the need to develop work ethics that support your strong business characteristics and develop relationships.
Learning never stops and you need to teach yourself strong attributes to overshadow your weak areas or non existent ones like understanding finance.
You cannot be an ultimately successful business person without understanding finance.
A successful entrepreneur has all the attributes required for success.
All successful business people have all the successful attributes learned, stored or bought but they are all there always.
Not everyone can produce rabbits out of hats.
Many very successful people do it through dogged determination.
Find the bone you want and bite down hard / do not let anyone take it away from you.
Protect it with everything you have / other people want it too - go the extra mile and give the person you are doing business with confidence that you are the best person for the job.
Many people will be offering services cheaper.
Match offers / business in hand can always be grown, but once – lost - it is almost impossible to get back and usually costs more to do so.
Make sure you do not come up on the company radar - other than someone everyone likes and really wants to do the business with.
More than ever now be professional, passionate committed and deliver against all odds.
A friend grew a very successful grass business many years ago when no one thought of buying instant lawn.
His success, he loved grass got up everyday to do what he loved best and made a serious amount of money - it took a while, but no one realized what a business he had built for himself by just being around and doing “his thing” everyday of his life.
Once you decide you are in for the long haul you will need to make decisions.
Expansion is a logical step, but may not always be practical, or you cannot reach the intended step on your own.
Ensure a proper business plan for expansion or an absolute understanding of the profit ratios and investment to turnover your business can achieve.
Many really good businesses failed because they just did not plan or decided to move forward without even a bad plan.
You need to arm yourself with all the attributes of success and ensure that they are deployed in your business.
My best working environment was a shoe designer for Edworks Border Footwear.
The company used to do a R10 million [US$1 million] per annum turnover and manufactured up to 10 000 pairs of shoes a day.
They are no longer in existence as they tried to change systems that had developed for a hundred years as craft, with systems created for manufacturing cars, the company lost millions had to reinstall everything the way it was and retrenched all the experts, and these actions started a huge downward decline that eventually saw them close for ever.
The second reason is management had no idea that the profitable area of the business was the vulcanized slipper plant that ran profitably for years without any interference.
In cost cutting this was the first unit they shut down selling the plant to the then MD who is still successfully running the business today.
Many businesses would still be trading today if the person who began it actually decided to study what a successful business requires and the attributes needed by the person who runs it.
For those in it for the long haul there are many steps you need to implement to achieve big dreams.
Entrepreneurs are not successful salespeople and do not confuse the two.
Entrepreneurs come up on your radar as people who develop business of value.
However, it requires careful planning in order to maintain the good shape that the business should be in for it to move say into the expansion phase which may be one of the headaches you are experiencing.
An expansion plan will outline how you intend to expand the current infrastructure optimally and to evaluate the options and opportunities which you can take advantage of especially increased and more profitable turnover to both fund the expansion and ensure greater sustainability of the business.
Any business can stagnate – fail, or loose out on opportunities if continuous improvement is neglected or ignored.
Never accept mediocrity and never believe you are doing it the best way without being really sure it is the best way. No business is perfect and each business needs to strive for improvement and a better reputation.
Various plans and reports need to be developed by you in order to improve the reporting of your business situation.
There is only one person who will change the business and that is you.
If you think that putting a highly paid person into the position then you are going to fail as you have no control of your business.
The buck starts and stops with you and the quicker you realize this and work toward being an efficient entrepreneur the quicker your business will succeed and people around you will notice the difference and realize you are the type of person that feels comfortable in charge and that you are the preferred business partner to do business with.
A Business Improvement Plan is a plan you create that evaluates aspects of your business to ensure maximum viability and best practice.
The plan sets out those activities necessary to bring about continual improvements in your business like reducing costs, effectively managing the working capital, improving productivity and measuring performance.
If one wants a business to grow, then a growth plan is the way to map the improvement required for the growth anticipated.
An entrepreneur may wish to grow his business and to make optimal use of its current infrastructure and resources.
Most trading business has some form of financial problems sooner or later.
A business can be carefully guided back to economic viability with quick action stabilizing the cash flow, outlining courses of action; getting the support of suppliers, lenders, employees, shareholders and possibly other entrepreneurs.
If your business is having problems get to the core issues quickly.
The report may highlight the need to grow, so in order to implement an “effective growth strategy”, one must realistically assess the present status of the business based on four basic factors from sales, turnover, market share and ultimately profits.
This will give you a starting point against which to measure the anticipated growth.
Firstly make sure that the business is running efficiently.
Then ensure that there is sufficient understanding of the changes that the growth will create and know what must be done to put these controls and systems in place as the growth strategy is implemented.
Salary is called a burden as it usually is the most expensive part of the business and to increase these expenses must be done only when there is sufficient turnover to cover them
I have too many experiences where business employed everyone and paid them out of start up capital to find out that not only were the staff unable to perform their tasks but that the business collapsed as the salary really became a burden.
A business man must first ensure the business is running and turning over profit and then replace his input with a cheaper resource in staff giving him more time to focus on the business of turnover and profit.
Discuss your growth plan in detail with your accountant and anyone else who will listen including those it will affect. Consider carefully all advice offered.
Growth is a double edged sword and the increased turnover can be a serious burden to your cash flow and cash resources.
My first very successful business created more problems as the growth was so large it absorbed all my cash and capital making it difficult to serve the business needs and then having to expand overdraft facilities and cash flow demands from projects.
The profit had to be immediately invested in the next round of business leaving no cash resources for the vat and tax demands
It became an ever increasing spiral which the eventual solution was equity but back then there was little chance of equity investment for small business.
All growth options have risks and rewards, and should be considered on their merits and on their suitability to your business.
When considering diversification, joint ventures, mergers and acquisitions, don’t be tempted to move into a field of which you have little knowledge and or experience. Remember how you started in business in the first place - you started somewhere with attributes that made it able for you to be employed or begin a business where you had knowledge, skills and experience.
This rule still applies.
Business activity that is in some way related to your current activities is easier to understand than trying something you have no experience without suitable mentors or advisors as in a franchise.
For example, the telkom industry is embracing media as they are direct forms of communication. Companies you currently service may require other things in order to streamline their ordering / that is why Walton’s [a stationary company] sells instant coffee as well growing into business that plugs into an existing business where you are already trading
Answer the following questions in order to help implement your growth strategy:
What additional staff requirements if any will be needed?
Will it be necessary to train staff?
Are your current premises sufficient?
Is the location of your business suitable for the growth?
Are your suppliers able to service your increased demand?
Do you have the necessary IT systems?
Is your staff motivated?
Are you able to finance any growth plans?
Will there be a definite return on investment (ROI)?
Do you have the management skills to manage a larger business?
We need to create a conclusion at this point
We have mentioned many factors and reports and things that you need to do to evaluate your business.
Do not be lazy at this stage and really do the work it will pay the rewards.
If you think it is hard, or your first thought is to get someone else to do it, you are not a wolf and I suggest you look for a job that requires your specific set of attributes.
While you may also be happy with the current performance of your business, never underestimate your competitors and the power they may have to take away from you, market share.
Prevention is a cure, so have a policy and reports that detail what you’re planning and keep these updated at all times for the continual growth of your business.
In conclusion there is a lot of work to do and if you feel you cannot cope, or that you need help, there are professional people who sell their knowledge in mentoring and coaching.
A professional auditing firm in Australia has permanent mentors and coaches who spend time with every employee in the company ensuring the employee exercises his entrepreneurship muscle to the maximum to ensure maximum efficiency and profitability for the company.
Mentorship is your policeman.
Coaching is getting you over the finish line.
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Opportunity: Cast Your Net Around.
Every person is one person away from the person you need to know, so by engaging with people and bringing the right people into your circle you are better able to fish for opportunity.
As players tighten their belts they sometimes throw away smaller business, they cannot profitably handle.
Look at relationship building to assist or to actually be given this type of business.
Forget about profit and look at survival what will bring you through intact and bills paid.
Profit is only good for governments when times are tough as most of it goes to tax in any case.
How much money do you really need to get through the tough months?
Hire instead of buy, or get other business to do the work for you, so you do not duplicate or pay for expensive infrastructure and re-invent the wheel.
Borrow where you can – service and support from people who also need a bit of extra business instead of setting it all up yourself.
You will be surprised at how creative you can be without own resources.
In a business I am looking after for the bank we were faced with an expenditure of
R45 000.00 [US$4 500.00] for three new scales
We came to a deal with a supplier who had three machines with no spare parts so he charges us R450.00 [US$45.00] per month for the three machines and if they break we all agreed to throw them away.
Win \ win all round
Further resources you require then develop a marketing plan.
Any product or service offered is useless unless it is sold and to sell we need to let people know where how and for how much they can buy it for.
People already are buying the things they need and are not waiting for you with bated breath to rush out and spend on it.
The marketing plan has to incorporate all aspects of the product or service benefits, features and pricing, Competitors’ and their markets and strategies and pricing.
Marketing incorporates distribution and whether you have sufficient product to meet demand and product life.
Does the cost justify the return? Many questions require many answers to do it right.
There are some excellent and well authored books as extra reference.
Conclusion people are the key to the success of the business find out who makes decisions, who decides if you get paid or not when and how.
Find people that are as positive as you are and build business relationships - not tea parties or drinking sessions but measure your success with banked business.
Business cannot be concluded without people “People buy from People” not web sites electronics or some faceless program somewhere.
This network is the greatest resource in assisting you to trade.
Weigh Your Options.
You need income and you need it now
What can you put on the scales of your business to balance the extreme shortage of cash or business, that will immediately adjust the balance and put the business back in harmony?
Look for things you can do to bring in income “now” today this moment do not wait.
Do you have underutilized resources you can or share with someone else who can trade them for things you can sell or cash?
How can you scale down to survive on lower sales and cash income?
Smaller inventory, just in time sales purchases on orders and deposit paid?
Shorter account terms with suppliers or debtors? We paid a supplier daily for sales in order to keep the business flowing in a business intervention. We put a deposit box linked to their account and faxed sales and deposits daily ensuring reduced risk for them and guaranteed supply for us.
Ask and make a list of questions.
What do we do well?
At what cost?
How can we save?
Do not venture into things you need to invest in for new business.
Use what you have to piggy back new business instead.
You need to keep your money in the bank - and not spend on anything that does not immediately bring money back in.
Pay accounts early so you relieve stress and create a positive business image for your company.
If a new direction does not realize a payable invoice or payment within three days do not do it.
Everyone looks for a savior in your business, someone you can put all the problems you have in their lap and wave a magic wand throw some stones - someone has blown on and it all goes away.
The biggest gift I can give you today is to convince you to do it yourself, as this is the only way you will learn. Most of the time getting more money will never resolve the issue of your business as the fundamental understanding of the business and how to trade does not exist. Money is never a solution to business problems - paid orders and gross profit in the bank is. Trade instead of borrowing greatest advice you will ever get
Many new companies get cash flow management wrong and fail.
Managing cash flow day-by-day and month-by-month can be likened to the blood in one’s body going from one organ to another to keep it alive. In the same way, a business has to continually be fed with cash flow.
This way, it keeps the business alive and well and its bankers, vendors and creditors happy! Managing cash flow is one of the biggest challenges small business has.
This intervention will help a business in this regard.
Understand that solutions are in trading with people and continued borrowing is never an answer.
If you cannot generate cash on your own it is very seldom you will achieve it by borrowing.
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5 Use your network.
This is different to casting your net around as casting is a chance that in throwing the net you hope that you will find something of value which does sometimes happen.
We all have networks. Phone them and ask for business. You will be surprised what business you can drum up within a friend or business relationship.
Make a plan have a meeting with a couple at a time explain honestly the problems you are experiencing and make a plan to implement the suggestions and proposals you come up with in your brainstorming sessions.
Many success stories are related to maturity in your network
As people have more confidence in delivery and your ability to perform they will trust you with more business.
In conclusion you will need to be able to sit in one place and by phoning people you know generate some successful business because you have assembled the right people around you, who are able to assist you in achieving the “driving of your business” through successful traded orders
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Do Not Be Afraid To Ask For Business.
Asking people for help is not frowned on and the worst that can happen is they say no, they may even refer you to someone who has business for you.
Failure is the next step to success and then you loose the fear of failure and with your back against the wall pull out all stops and be the most amazing business person you can be.
Never be shy - business people are not shy to ask for business it is what makes us successful
The need and drive for business is a fundamental trait in doing good business.
Even drug addicts go to the bottom before they turn the corner.
Only your fears which are really dumb stop you from succeeding and asking for help when you need it most.
Learning to ask for business is in your strategic plan knowing where when and who to ask
Ensuring the information is at hand not going back for quotes doing the business then and there and asking for an order.
Having a strategic plan will not guarantee success, but without one, your business has a far greater chance of failure. Your strategic plan will provide a framework on which you will hang all the company’s policies and according to which you will make key decisions that determine the direction and performance of the business.
The strategic plan acts as a point of focus for every activity in the business and can serve as a concise explanation of the business and its objectives and activities. If something does not form part of the strategic plan, it should not be undertaken.
It is therefore important that the strategic plan is well thought out and developed in consultation with other key players in the business such as all the owners, managers and even certain staff members.
They do not have to all participate in the same forum, but should be included in the strategic planning process in order that they all take ownership of the final plan. Everyone in the business will be expected to help fulfill the strategic plan. If they don’t agree with it or don’t feel they had an opportunity to contribute to the plan, they might not be committed to it.
Your strategic plan is not intended to help you run the business. That’s the function of an Operational Plan. The strategic plan is a high level, conceptual document which provides the overall vision for the direction you want the business to take.
A Strategic Plan even if it is just carried in your head helps to keep you focused on the intentions to trade and do business and is one of the most important tools in the attitude arsenal.
Once all have participated in developing the strategic plan, ensure that it discussed with and communicated to all stakeholders on an on-going basis.
When you are running a business many people will come to you with offers.
I was offered a Vodacom [Branded Cell Phone shop] shop for free in 1990, when cell phones first came out people did not see the future they would be. I turned down the offer even though today it would be worth millions and with no regrets because I could never see myself explaining cell phones to computer illiterate people everyday of my life. I have stayed focused on the way I want to achieve multi million rand success through my innovation and vision and I will eventually have my success as I stick to my principles and position to achieve it in my own way.
Other business needs your business and they will listen if it means their risk is mitigated, debt paid and you become a stronger business partner.
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Negotiate With Creditors.
Talk to people, they are part of your business.
A recent mentee who was really battling now has R1 million [US$100 000, 00] per month business because he sat down with supplier and entrepreneur at a table and worked out an agreement that was good for everyone
I told him his business was not financing stock but reworking it into the products his clients wanted. So now the entrepreneur’s customers buy the raw materials which are delivered to him to process and he does what he does best and is paid for it, without having to finance tons of products he does not use
So you need to know what your business is really and do not try and dabble in funding business that has nothing to do with you. I am often contracting, and people expect me to take a percentage of their business as part of the deal and are surprised when I refuse.
I charge the client what my fee is for my hours as that is my business not percentages of other peoples work.
When there are complications and issues that require resolving I can be impartial and distance myself from the problem to find the best solution as there is no emotional or other ties to the deal.
I do not feel guilty that this “other business fee” is depriving the client of much needed value
It however requires great knowledge of my business to ensure I charge the correct fees and that people understand the value of those fees to their project.
The profit to my business and sustainability is allowing people to see the value and substance I bring to the table, and the clear savings of costs to their project.
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Negotiate With Debtors.
Ask your debtors to settle a bit early.
They all know it’s tough.
Ask them for 50% of the invoice in the middle of the month and let them hold back 10% for 2 months.
You need to survive and do not need profit if your business is properly structured.
Work out cash deals for up front specials that no one can say “no” too.
Plan to get in enough money to cover costs and survive until you can generate profit before the 25th of the month.
This way you can focus on driving much needed business while everyone’s purse strings are open and you are not wasting energy collecting money for past business when you need to be focused on present business.
There are only three people who want your profits, your accountant because he was taught too, your bank manger because he knows then he does not need to lend you money if you have your own and the receiver because he needs it. Profit you just pay half to the receiver in any case so concentrate on keeping your business alive.
Flat lining business models help you to understand that monthly costs you need to keep the doors closed yes closed without trading. When the doors are open and you trade that is a separate costing and must be linked directly to your service or product.
Cost per month or year - absolutely bare essential payments and divide these between how much service or product you can supply. Charge raw materials out to clients as required to make the product [give this to your entrepreneur at cost, you are not in that business]
Add the working costs as a Rand / Dollar value and then packaging and delivery separately.
This way you can make decision with suppliers to buy the volumes you require surviving as your products and services will be lean and cost competitive.
Never work on percentages when times are tough they are misleading in understanding your business.
The butchery point of sale was telling us it was putting on a 25% markup and we were making between 18% gp [should be 20% if things were running smoothly]
On costing the business the reality was very different - there was moisture loss, cut loss and bones with no sale value that cost us the same as the rest of the quarter.
So in reality we never made more than 10 to 11 % when everything is cut and sold right - a far cry from the wonderful gp% the system showed. Our solution is to sell more - we dropped prices and increased supply. People are buying from the cheapest and we worked on a model to be the cheapest seller around and implemented it – growing the business as well.
We have negotiated a supply chain agreement for the product and have traded more products in three days of one weekend then two weeks previously. Business is about getting it right.
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Cutting Costs.
Outsourcing your business to other people who can do it better and cheaper.
Look around for suppliers with better pricing and ask your suppliers to meet this price.
Negotiate with suppliers for minimum basic supply at rates and pay them up front for the products only putting monthly purchases on accounts.
Convert all business to cash and use cash as the leverage to cheaper prices
Cash is king [or acb [internet banking] debits on time and as promised]
Cutting costs is a number of factors.
I have increased salaries so all the staff are happy and can cope with increases.
They are now protecting their jobs and have volunteered to work longer weekend hours at peak before and after month end trading periods.
This was unsolicited and brought about by them as they saw the need to improve turnover cash flow and gp.
They ensure property compliance to delivery invoices, are much happier at work which is creating a pleasant working environment. Staff take time off in low trading times and ensure everyone is at work for major trading times. We have increased turnover and have reached previously unheard of daily sales.
The place has never been cleaner, machines are working optimally and everyone is being their own responsible person. So by giving people what they need to survive we are achieving all the targets the business needs to cut costs.
Business costs have dropped by R200 000.00 [US$20 000.00] per month by staff negotiating with suppliers for better deals, consolidating purchases, ensuring minimum wastage and maximum utilization of resources
Quite an achievement brought about by increasing wages which are usually the first to be cut. The increase in the wages is 10% of the current savings.
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Sharing the Burden Making People Responsible.
Everyone in your business chain is responsible for your success.
Negotiate with them and speak to them about your challenges. Be honest and upfront.
Only work with people who read from the same page and ensure your team understands the need for success.
Make each person responsible - you cannot manage more than 3 people at a time so delegate and make people take charge. It will relieve the stress and help you to focus on real issues of management and sales.
Entrepreneur Care Check-list
Lead by example. Be the champion of entrepreneur care. Never avoid anyone when times are tough. Set the standards for how you want your staff and clients to be treated and then exceed them.
Be very responsive to your client’s needs and wants and motivate your staff to follow suit. Train your staff to apply the “Three Ring Rule” - answering the phone within the first three rings. Reply to e-mails promptly or if unable to, apologize for the late response and offer a brief explanation (not excuse) for the late response.
Continually emphasize to your staff that everyone is responsible for client care and orders. Encourage staff to be courteous and friendly, yet professional. Friendliness on its own is not enough. No-one likes phoning a company where everyone is very friendly but no-one knows what’s going on.
Under-promise, over-deliver. Avoid making unrealistic promises just to impress clients and then fail to carry out your promises. This is worse than never having made the promises in the first place. Make realistic promises and then work hard to exceed them.
Always attempt to build long-term relationships with customers. It is so expensive to get one client for heavens sakes keep them and then improve your relationship to do more business with them. I have clients who have provided millions in business in cycles for over twelve years.
Empower your staff to be able to act on behalf of the business in order to solve a client’s problem. So long as you have hired the right people and managed and trained them correctly, there is probably no need for them to refer every complaint to you before taking action.
It makes them look good when they are able to tell the client that they can sort out the problem, and then do so. Managing a wrong decision is easier than chasing indecisions.
If orders take time to be processed, always keep your client in the loop with the progress of the order. In the case of a delay, let the client know as soon as you become aware of the delay. If possible, offer the client options to get around the delay.
Make sure you know who your profitable clients are and who your least profitable clients are and treat them all the same but go the extra mile for people who give you more profitable business.
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Buy in From Staff.
Explain to your staff the challenges of the business and ask for their “buy in.”
Let them help move product. Let them help streamline the business they sometimes know more than you do.
Ask them to go the extra mile after all they all feed from the same table, and need to contribute to the overall success of the business.
Everyone in the business needs to be a salesperson and I mean everyone
There is no space for people who do see their role as pivotal to success within the organization.
I have found that management, so fears sharing, that it impacts negatively on the business.
People are the reason you are in business. Look after these people and they will look after your business.
If they do not then they are the wrong people you have employed. Respect employees and pay them to go the extra mile. It is hard for everyone, set standards in your business and invest in your staff.
If you believe in them they will believe in you, and if you invest in them and they do not perform it is easier to remove them without conscience. So many seemingly successful businesses have staff doing work on the side that if all is consolidated the business would boom.
By not sharing this created need for employees to seek income elsewhere to survive.
No one is working because they want to. They work because they need to and by making it easier for them to live relieves negative pressures ensuring a more focused work force.
If it does not, trust me you either have the wrong people, or you are employing your mother in law or you really should not be in business as you have no clue on how to manage people.
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Do Your Homework.
Take your business apart paper by paper to see exactly what your core business is.
Ensure that non profitable business is outsourced or traded off or removed.
Make sure you understand the workings of your business and what you are selling
People in the butchery think we are selling meat when in actual fact we are selling weight in kilos. We get weight in and we sell weight out. The success can equate to selling a million kg’s at 10c profit each instead of 1000 steaks at R20 each.
Entrepreneurship is hard work and is not some easy get rich quick scheme. Entrepreneurship is being a well rounded grounded person who has dreams of being rich through his intuitive understanding of business.
Many people succeed and fail and then bounce back, because they are true entrepreneurs. They are prepared to give everything as they know the laws of attraction will bring success again.
They work hard at it [entrepreneurship] and people recognize these attribute and will give them successful business as it becomes profitable for everyone to do so. They understand these people deliver with passion and commitment beyond the normal business, they are their for the long haul are passionate about delivering standards they are proud of and always go the extra mile for you and all they ask in return is pay them by the 25th be loyal to them, as they are to you.
Grow them as they will remember you on the way up and more often as not will offer a hand when they have achieved success because you helped them then when they needed the help.
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Do Not Take Unnecessary Risks.
Keep the money in the bank for work that you know brings in turnover.
Do not go for quick rich quick ventures - They do not work. Go around and look for people who have done it this way. They all started with big fortunes to make small fortunes.
Do not look for specials you can make a quick buck on. Usually it was someone like you who went to China and bought last seasons Fila shoes. They are called “steals” as you have parted with good money for product that the only way you can get rid of it profitably is if it is stolen and insurance pays out. . All the quick rich schemes are focused on good sales people who can generate sales
Conclusion - Do not do it no matter how good it looks.
Anything that looks that easy just means it will cost you a lot of money to make it easy.
Repeat after me “I will NOT subscribe to ‘get rich quick schemes’ because they will cost me money”.
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Stick to Basics
Find out what is the most profitable portion of your business and grow it. Get rid of everything that ties up slow moving business or stock. Convert everything to cash in the bank and stay lean and mean.
Get rid of any useless inventory at any cost - auction it, give it away as a promotional line.
Holding stock is costly but R10.00 [US$1.00] in your hand is better than a million in an expensive storeroom. No inventory is worth anything other than what it can be sold for.
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Stick to Knitting
Do what you do best.
Do not try and start new ventures and product lines that you have no experience in these always generate school fees something you cannot afford in a down turn of the countries economy.
Talk confidently of your business from a position of strength and ability.
Learn when to stop selling and accept a deal, many people talk themselves into a deal and then right out again as they do not know when to stop.
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Plan Your Business and Keep Everyone Informed Especially Your Banker
Make a plan
Stick to it
Speak to people and get informed information
Is it doable? / Who can help?
Now more than ever your business plan is critical to your business
Poor financial management is one of the main reasons why businesses fail.
Therefore this is not something that you should delegate to your banker, consultant or accountant.
You need to have a grasp of the basic principles of your entities financial projections.
Cash is the lifeblood of any business. Cash inflows and outflows occur at different times. Managing the timing of these inflows and outflows will determine whether the entity will survive or not.
Modeling different scenarios will assist you in ensuring that your enterprise can meet its cash flow requirements. Once you have completed your financial projection model, you will have created a projected
cash flow statement
income statement and
balance sheet
These are workable models for managing the finances of your small business and give you an understanding of how the financial decisions you take affect the activities of your business.
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Downgrade Where Possible
Keep everything to a minimum do not expand. Survival is about consolidation, after you have stabilized you can reevaluate.
Utilize exiting infrastructure to bursting point.
Get people in who can share expenses, and develop relationships.
We had a need to deliver, but the delivery vehicles was forever in need of repair and was not fuel efficient, so we found a private individual who collects payments and charges clients directly for delivery.
We normally have clients trying to twist our arm for “free delivery.” It does not happen any more.
He is efficient; friendly has brought in more business for which he gets a commission and helps us with post office and banking for which he is charged a flat fee. To date we have saved thousands in repair and fuel bills.
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Image is Not Important Survival Is
Dream about the porche but buy a bicycle.
The porche you buy when you have the money to do it, get a poster of one it does not need servicing.
Do not have a “flutter” on fancy products when basic ones can do the job.
Our deepfreeze broke and the repair bill is R50 000, 00 [US$5 000.00] when we checked the business the deepfreeze was just a lazy way of not selling. We shut it down and not once in 3 months have we required a deepfreeze as everyone ensured that nothing was left that needed freezing.
Study these tips carefully and implement them in your business where possible; ask questions, they are never stupid,
Make connections whenever possible, but do not expect business if you cannot give business in return.
Do not always try and meet someone because he is a successful business man.
Look for people who can transact with you on mutually beneficial terms and make money together.
Politicians make the worst business contacts and other business men the best.
Be hungry for business and do it well and lastly “get up everyday with the idea of making some money honestly with integrity passion and drive.”
Make an entrepreneurial dream a reality today and make today your first step to success.
There is no shame in learning from other’s hard worn lessons through mentoring and coaching.
Get up are failure do not even think of staying lying down. Remember that people buy from people. The universe rewards good practice and you sleep better for it.
Dream yourself successful but follow it with the passion, learning, focus, knowledge, commitment and once you know you have all the parts never ever ever give up as you will never be bound by other people’s limitations again.