Using Checklists to Manage Your Business and Eliminate the "Oops" Moments
Have you ever encountered the "Oops" situation? Ever said "oops" when the customer received a damaged or non-working product, when the contract had incorrect prices, when the bonus wasn't included in an employee's check, or when a quarterly insurance payment was missed? We all have experienced an "oops" situation, and we know how that feels as well as what it costs. Using checklists can help to reduce the number of "oops" moments.
Checklists are a key component of a successful business operation. Utilizing checklists throughout a business leads to higher profits, more efficient and productive operations, satisfied customers, and a better quality of life for you and your employees. This article addresses all aspects of a checklist, from what they are, to how and where to use them, and what benefits you can expect to realize.
A checklist is a list of items or tasks that you "check off" as you complete each item/task on the list. Checklists are everywhere and are an integral part of most activities - both personal and business. In our own daily lives, we make checklists for organizing ("To-Do Lists"), planning (birthday party), prioritizing (bills to pay), shopping (grocery list), and so forth. Business is no different; checklists are essential to an effective, efficient, and profitable operation.
Checklists are used to plan, market, operate, and manage your business because checklists provide an effective means to organize, prioritize, direct, control and measure business activity. Simply put, without checklists there would be chaos. What would happen if each salesperson processed an order differently? Or there was no budget? Or you didn't know what was in inventory? Or what items were already on order? Or who was scheduled to work the evening shift? This not only would be chaotic, but it's also simply not good business. Checklists are essential to the successful operation of a business.
Let's look at the primary functional uses of checklists in business:
Planning: The strategic plan is a list of goals to be accomplished in the next year and prioritized according to importance. The tactical plan is a list of action steps to take to meet a particular goal. A budget is a list of income and expenditure accounts and amounts intended to produce a profit. Planning checklists may divide into sub-lists, which, for example, might address store (or office) goals, customer goals, or product goals.
Marketing: The sales (or marketing) plan is a list of targets to achieve. These targets can be sales dollars, unit volumes, growth levels, new markets to enter, or market share. Sub-lists can be developed to address products, territories, major customers, advertising, and even individual salespersons.
Operating: "How to" lists are the mainstay of an efficient and effective business operation. Checklists cover the opening and closing of the store, recording a sale, dealing with customers, packing and shipping, handling inventory, ordering from vendors, depositing receipts, paying bills, and accounting activities. These checklists provide employees with the proper steps, in the correct sequence, to finish a particular task, such as completing an order form. The checklist also ensures that mistakes are minimized, time is well spent, revenue is optimal, and the customer is well taken care of. As for the latter, how would you feel if the clerk forgot to enter the serial number of the appliance you bought, and your warranty wasn't in the system? A checklist makes sure that necessary steps are accomplished in the correct order.
Managing: Management uses checklists to report on how well the business is doing (revenue, expenses, profit), how to manage employees (timecards, payroll, performance), how product is moving (inventory, sales, turnover), how customers are being serviced (repeat sales, complaints, warranty service), and measure how the planning, marketing, and operating plans are progressing.
Checklists can be organized in any number of ways and are chosen to meet the specific needs of the task at hand, serve to minimize time and cost, maximize profit, ensure customer satisfaction, and provide meaningful metrics. Some of the more popular ways to organize a checklist are discussed below:
Ordered List: This type of checklist is a list of tasks needed to be accomplished in a particular order. Usually the checklist is numbered, starting at the first task or step, and proceeding to the last task or step, in increasing numerical order. For example, an order process has ten steps, numbered 1 through 10, starting with the order form (#1) and ending with the customer's signature (#10) on the form. The ordered list ensures correct and complete processing.
Itemized List: This is a list of items that need to be addressed, usually with some meaningful information alongside, and is used as a guide or reference. Examples would be a general ledger listing of accounts, a product list, a customer list, a vendor list, a sales target plan, etc. The purpose of an itemized list is to provide a complete accounting or reporting of the information present.
Sub-List: A sub-list is a branch or subset of an ordered list. For the sales order processing example above, sub-lists might exist for handling options on the product being sold, or for processing the type of payment (cash, credit card, check). Sub-lists can exist for almost any of the above types of lists.
Prioritized List: A prioritized list is any of the above lists placed into an order based on some priority scheme. For example, if we organized a listing of all inventory based on size, weight, price, or frequency of turnover, we would have a prioritized list. This type of list helps us to use our time effectively, to focus our energy where it's most needed, and to address the important items or tasks first.
General List: This is any of the above lists with a space for a check mark, initials, or additional information. As tasks or items are addressed, the line is checked or initialed as being done. Examples include (1) an inventory checklist might be a listing of inventory items to be counted. As each item in the list is counted, the count is written next to the listed item; (2) a bill of lading from a trucker would be a checklist itemizing all the items being delivered. As each item is received, counted, and inspected, the item on the list is checked off; (3) a procedure checklist is a listing of steps/tasks to take to complete an operation (such as a sales order). The use of a checklist ensures accuracy, accountability, completeness, and efficiency.
The point to using checklists in business is to plan intelligently, market effectively, operate productively, manage efficiently, and make a profit. Through the combination of different types of checklists, used in all the functional areas of the business, a successful and profitable enterprise can result. Let's look at the specifics:
- Intelligent planning uses an ordered checklist to conduct the planning sessions, and develops prioritized, itemized checklists for the plans and goals.
- Marketing involves prioritized, itemized checklists to help achieve their goals, and ordered lists to carry out the marketing plans on a day-to-day basis. Checklists are used to measure the results of the marketing work.
- Operations uses ordered checklists to accomplish the many tasks that are part of daily, weekly, monthly, or other operations. Itemized checklists are used alongside ordered checklists, to address inventory, parts lists, or options.
- Management relies on all the types of checklists to accomplish their objectives. Ordered checklists drive the functional aspects of management. Prioritized checklists ensure that all reporting is done, and itemized checklists collect the metrics necessary to evaluate the business and report a profit or loss.
So, how do you make a checklist work for you? Let's follow the six steps below:
- Organize:
Make a list of items or tasks that need to be addressed or accomplished. For example, a buyer would make a list of items to order, a salesclerk would have a list of steps needed to process an order, and a human resource person would have a list of steps necessary to process a new employee.
- Prioritize:
Sort the list of items/tasks into a meaningful order, from the first or most important to do, to the last to do. For example, the buyer may group items by vendor and/or by earliest delivery date, the salesclerk would align the order process in the correct order to avoid mistakes, and the human resource person would process the new employee through all steps to ensure nothing was missed.
- Develop:
Create the "check" part of the list by assigning a check box, a space for initials, or a place for additional information to be entered. For example, the buyer may annotate each item with the purchase information (quantity, delivery date, purchase order number, vendor confirming number, and vendor clerk's name), the salesclerk would number the steps in the correct order, and the human resource person would have the new employee initial each step as having been read and understood.
- Validate:
A checklist has little value if it is not reviewed and tested by the person that is going to use it. If it's your own checklist, you should test it (go through it) to make sure it's workable, makes sense, and it achieves the purpose for which it is intended. With anyone else, take them through it (rehearse it) to make sure they understand what the checklist is used for and how and when to use it.
- Apply:
Have several employees use the checklist as it is intended.
- Amend:
As you or your employees utilize the checklist, invariably "problems" will be found, or efficiencies can be introduced. Be open to making modifications, additions, and deletions. Only through change do we achieve the best we can be.
The point to using checklists in business is to operate productively and efficiently, keep costs low, and make a profit. As we've discussed above through examples, checklists can be used in all facets of any type or size operation. Checklists help to organize tasks, manage time, operate more efficiently, avoid excess costs and wasteful ways, and ensure compliance with laws, policies, and procedures. Checklists can be developed internally, can be purchased through a commercial source, or purchased and modified to meet your specific requirements. Purchasing a commercially available checklist that has been tested by many other business owners can save you a lot of time and money. The business checklists on this website have been successfully used by hundreds of businesses and are offered at a very reasonable cost. However your checklists are created, their use leads to a successful and profitable business.
Up to this point, we've talked about the types, development, and the various uses of checklists in a business. The last question is "Why?" What benefits accrue from using checklists? Let's take a look:
Minimize Mistakes. By using checklists, you stay focused and ensure all steps are processed in the correct order, correct pricing and taxes are applied, correct information is given to a customer, inventory is received and counted correctly, and employee time is recorded correctly. Mistakes are minimized.
Operate Productively. By using checklists, daily operations will proceed in a timely, orderly, and organized fashion, with less chance of "re-do's", less time per customer (or more customers handled), more time to get additional work done, better employee morale, and a belief that the business knows what it's doing.
Advertise Efficiently. By using checklists, the advertising effort will target the customers you want and will give you the feedback needed to fine-tune or re-tune your sales and advertising efforts. This leads to a better return on your advertising dollar and an increase in sales.
Manage Effectively. Through the effective use of checklists, management and supervisors now have a better reporting and communication system allowing them to better observe operations, focus on and address issues, and make changes faster and more effectively.
Reduce Costs. By applying checklists as described in the White Paper (minimizing mistakes, operating productively, marketing efficiently, managing effectively), you will save time and money.
Improve Morale. The use of checklists leads to less stress, more positive feelings, a better informed and educated staff, and an overall belief that the business knows what it's doing.
Satisfy Customers. Effectively utilizing checklists leads to customer satisfaction and that leads to repeat business, referrals, and positive feelings toward your business and products, resulting in higher profits and a sustainable business.
Checklists are a valuable and essential tool for any sized business. They provide a meaningful, realistic way to plan, organize, operate, and manage a business and its money, products, customers, employees and results. The effective use of checklists is the key to a well-run, profitable business and for eliminating the "oops" moments!
Take the next step! Explore the Business Checklists we offer that will help your business generate more revenue and become more profitable by visiting Business Checklists
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Top 10 Considerations When Selecting an Assisted Living Facility for Yourself or a Loved One
Selecting an Assisted Living Facility for yourself or a loved one is an important decision as it will greatly influence the quality of daily living for the latter part of one's life. This is not a decision to be taken lightly. There are many facilities available, some are excellent, and unfortunately some are only fair. Sorting out information and asking the right questions is crucial when comparing facilities. The following Top Ten Considerations will help you focus on areas that need to be examined carefully before signing a Resident Contract.
1. Caregiving staff ratios: Perhaps the most important consideration when selecting an Assisted Living Facility is the ratio of caregiving staff to resident. Do not be misled by a facility including administrators, maintenance, housekeeping, and kitchen help in their staff to resident ratio. Ask specifically about the resident to caregiving staff ratio. It is important to know how many residents an aide or nurse is responsible for. If you are told that it is a common industry problem to be short staffed, that it is difficult to find or keep workers, under no circumstances should you lower your standards for quality care. Facilities can attract and keep good workers by offering good working conditions, training, benefits, competitive wages and incentive programs. It is the responsibility of the facility administrators to hire and retain enough qualified staff members to provide the level of care promised. Understaffed facilities equal poor care.
2. Training of staff members: All staff members must be properly trained; state certified, licensed, degreed, or be otherwise educated in their job capacity. Additionally, ongoing training, such as seminars, conferences, workshops, or in-service educational programs should be required on a regularly scheduled basis. Many facilities are lax with employee background checks, proper training, and supervisory procedures.
3. Customer Service Attitude: The attitude of the staff directly correlates to the resident's quality of life. Carefully observe the behavior of staff members. Are they unhurried, patient, positive and cheerful? Are they interacting with the residents? Do they know them as individuals? Do they treat them as individuals? Do they enjoy and appreciate older people? Are the administrators and department heads available and willing to discuss problems and concerns or answer questions? Is the facility adaptable to special dietary needs, cultural or religious practices or ethnic customs? Does the facility feel more like a home or an institution? Do residents and families have input into policy changes and procedures through Resident Council or Family Council meetings? Most importantly, are the residents treated with dignity and respect?
4. Age in Place Feature: As people age their needs change. Are increased services available within the facility as they become needed? Does receiving increased services necessitate a move to another floor, wing, or building, or can these services be provided within the resident's established apartment or room? Would it mean separating a married couple? Can this facility remain a resident's home until the end of life?
5. Medical Emergency Procedures: Emergency procedures are critical. Ask to be "walked" through the procedure in the event an ambulance needs to be called. It is extremely important that medical information accompany each resident to the hospital in an emergency situation. Patients in crisis are often unable to speak for themselves. Emergency room personnel will be delayed in responding quickly and appropriately without a list of medications and medical conditions. Please do not assume that this is common sense and will automatically happen. In some facilities it does not, with disastrous results. Ask to see a sample of their emergency medical packet.
6. Safety: It is essential that twenty four hour security be provided. If you are placing a family member with Dementia/Alzheimer's disease in a facility, be sure the unit is secure; keyed, coded, or alarmed. Check for adequate lighting inside and outside the building, handrails, non-slip floors, sturdy furniture, smoke alarms, sprinkler systems, back-up generator, lighted emergency exits, fire extinguishers, and emergency call buttons in each resident's room. Confirm that all staff members are well trained in emergency procedures as well as CPR. Ask if wellness checks take place during the nighttime hours or following injury or illness, and be certain that all staff members have been specifically trained to recognize and assess medical emergencies.
7. Activity Program: A wide range of activities should be offered to accommodate a wide range of resident interests. Review the activity calendar to be sure the activities offered are appealing to you. Be aware, although an activity calendar may look impressive, these activities don't always take place and at times do not meet even minimal expectations. There is no substitute for observing things for yourself. Visit at a time when an activity is scheduled and watch the activities staff interacting with the residents. Do the residents appear to be enjoying themselves? Does the facility own a van or bus to transport residents to community or cultural events? Is the van used on a daily basis? Is the activities staff willing to accommodate personal interests?
8. Apartments or Rooms: Does the facility offer a choice of apartment or room sizes and layouts? Is the option of private or shared living space available? Most importantly is the apartment or room spacious and comfortable enough to adequately contain a resident's cherished personal belongings in order for it to feel like home?
9. Location of the Facility: Evaluate facilities located in an area that is familiar to the resident and where they would be able to enjoy familiar activities. It is desirable for a facility to be located close to family members and close friends allowing for frequent visiting. The facility should also be in an area that is senior citizen friendly; safe, well lit, handicapped accessible, and serviced by the Council on Aging or other senior citizen groups. It would be helpful if the location was close to the resident's primary care physician, a hospital, a pharmacy, and a grocery store.
10. Actual Cost: Rates are normally quoted on a monthly basis. Be aware, however, of hidden costs. Are all services included or are you charged for meals on a per meal schedule, are additional personal care services charged at an hourly rate, is laundry included, is there a community fee, are activities an extra charge, is there an application fee, a security deposit, are transportation services included? Be sure all add-on fees have been carefully explained and described to you in your resident contract.
The above Top Ten Considerations are only a starting point when choosing an Assisted Living Facility. The Checklist for selecting an Assisted Living Facility for Yourself or a Loved One contains over 650 items to be considered and evaluated. This workbook enables you to quickly and easily compare 3 different facilities, prioritize your needs, and choose the Assisted Living Facility that best suits your (or your parents) expected lifestyle. Additional features include a sample medical emergency packet, an Alzheimer's section, and helpful hints for a caregiver. For more insights with selecting an Assisted Living Facility and a detailed description of the checklist, including sample pages, visit Choose an Assisted Living Facility.
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BUSINESS STRATEGY ARTICLES: |
I. Cash Management Series - - Managing Your Accounts Receivable
Managing cash is one of the most critical elements to having a profitable business. Without proper understanding of the "Cash Cycle", many businesses find themselves cash constrained, thus limiting management's ability to conduct day-to-day operations as well as make long term investments to ensure the viability of the business. Tightly controlling the Accounts Receivable process will help eliminate the "cash crunch" many businesses find themselves in when A/R policies are lax. Use the strategies below for more effectively managing your company's cash.
1. Discuss payment terms during the sales process: It is simply amazing how infrequently this happens. Sales reps or business owners generally don't like to discuss payment terms as it is often viewed as a "negative" during the sales process. However, setting the right expectations early in the sales cycle saves everyone a lot of problems later on and also establishes credibility for your company because the client knows you are serious about collecting what is justifiably owed to you.
2. Have the customer submit a credit application: This is one of the activities that many small or medium size businesses fail to execute. Many decisions regarding who to accept as a client are resolved instantly with a credit report.
3. Offer a discount for early payment: There are pluses and minuses with this tactic. It is assumed that with this tactic cash flow would generally be more rapid, but this isn't always true. If you offer an early payment discount to a client who always pays invoices on time, then you have unnecessarily given away part of your profit. Many large companies have a standing policy whereby they take every discount available because they understand the value that is being offered. Other companies will take the discount even though they have not complied with the terms. This makes enforcement very difficult and trying to collect the discount can be more costly than the actual value of the discount. Offering an early payment discount to a "slow" payer may be just the incentive that is needed to collect payments on time. Analyze your client's payment history and selectively apply this strategy for maximum benefit.
4. Charge interest on overdue accounts: This may help to receive payments on time as companies don't like to be penalized or pay more for a product or service than is necessary. This element of the payment terms should also be discussed early in the sales cycle. Although charging interest on a past due account is a fairly standard practice in most industries, as with early payment discounts it can be costly to collect if the customer does not pay the interest. However, assessing the late fees on a subsequent invoice can serve as a motivator for the customer to pay the original invoice (oftentimes less interest) which is far more important than collecting late fees.
5. Send invoices promptly and with a specified due date: Don't wait until the end of the month or a fixed date to send invoices - send them immediately. If you ship a product at the beginning of a month and wait until the end of the month to send an invoice with thirty (30) day terms, then the payment cycle is sixty (60) days. If the invoice is sent immediately, then the cycle is thirty (30) days. A long payment cycle can cripple the company cash wise. Always include a Due Date on every invoice.
6. Require pre-payment for custom or large orders as well as long term projects: Custom work requires extra steps in a process which adds to the cost, and, as it implies, is customized for a specific use or for a specific customer. This generally means the finished product may not have much value for any of your other customers. Therefore, a large pre-payment is justified to cover your extra labor and material costs as well as your risk if the customer suddenly cancels the order. Long term projects require periodic progress payments from the customer that match the company's spending cycles to ensure that the company does not have a "cash crunch".
7. Don't hesitate to ask the customer to pay: Many employees, managers, or business owners are afraid to ask the customer for payment in the fear they may upset the customer or make it appear their company is desperate for cash. The longer you wait, the harder it becomes, and the higher the probability that you won't be able to collect that which is due you. If the terms are thirty (30) days and an invoice is not paid, immediately send another invoice stating, "PAST DUE - IMMEDIATE PAYMENT REQUIRED". If this doesn't elicit a response within ten (10) days, then start calling the client for payment.
8. Personalize the collection process: Many employees, managers, and business owners are especially fearful of making telephone calls to collect Past Due funds. However, I strongly suggest that you can usually collect your funds quicker this way than with numerous letters and invoices that are stamped "PAST DUE". Never get angry, make a friend within your customer's Accounts Payable department, and use guilt to your advantage - they already know they are late and that you are owed the money. If your client is financially unable to pay the full amount, then try to receive a partial payment along with a schedule for when you will receive subsequent payments.
9. Tell the truth - "I can't afford 60 to 90 days": If you are a small or medium size business, you really can't afford 60 or 90 day payment cycles. Larger businesses understand this. If your client values your services, then they will usually pay in a timely manner.
10. Don't do any more business with someone that doesn't pay: This sounds so obvious, but far too frequently a business that desperately wants to keep a "good" client will continue to ship additional products on the promise of a payment which never materializes. Set limits on how much product you are willing to ship, and don't ship more products than this limit allows until payment is received.
11. Factor your Accounts Receivable: Factoring is the sale of accounts receivable invoices to a funding source (factor) at a discount off the face value in return for immediate cash. Money is only disbursed after the transaction is complete. Each of the accounts offered to the factor for sale must reflect an accurate statement of a final sale, delivery, and acceptance of goods or services performed. The process typically works like this: The business delivers a product or service and issues an invoice to the customer. Without factoring, the business normally waits 30, 60 or 90 days for payment. With factoring, the factor immediately purchases the invoice and advances an initial payment of 70 to 80 percent of the invoice amount. In most cases, the business will have the funds in their account within 24 hours. When the customer pays the invoice, their payment is made directly to the factor. The business then receives the remaining balance (20 to 30 percent of the invoice amount) less the factor's fee. With factoring, it is important to note that it is the credit worthiness of the client company that is important, and not your business's credit worthiness.
12. Delay paying sales commissions until the customer pays you first: This strategy will help make the sales rep take an active interest in collecting receivables. It now becomes important for the sales rep to discuss payment terms during the sales cycle.
13. Don't take an order you can't make a profit on: This is a hard principle to adhere to when you are trying to close a new account. Once you have established a "low" price, it is very difficult to raise prices at a later date. Also, customers "brag" about the deal they got from you, and now everybody expects the same deal. It is extremely difficult to sustain a business with low margins.
14. Offer volume discounts judiciously: If you plan on offering volume discounts, base them only on orders actually received, not on the "promise" of future volumes. Some companies will request a price asserting they will be buying large quantities of your product over a long period. After the volume discount price is established, only a few items at this low price will be purchased. Establish a discount schedule that defines a specific discount for a specific quantity purchased. Apply larger discounts when, and only when, larger quantities are purchased.
15. Don't ship more product than you can afford to lose: One of my clients was having a lot of difficulty collecting payments from a customer that was having financial difficulty. My client, based on my advice, was to only accept COD terms from his customer. Late one Friday afternoon I happened to be in my client's area, and I stopped in for a visit. Thirty six boxes of product valued at over $10,000 were ready to be shipped. However, his customer had requested the COD label be placed on only one of the 36 boxes to save time, expense, etc. This would have been a financial disaster for my client. His customer was planning on accepting the 35 boxes without the COD label and rejecting the one box with the COD label. Always be wary of customers who are slow payers or who are trying to find a way around "the system". No business will survive with customers such as this.
Apply the Savvy Strategies of "Managing Your Accounts Receivable" to free up the cash for rapidly growing your business!
Take the next step! Explore the Business Checklists we offer that will help your business generate more revenue and become more profitable by visiting Business Checklists
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II. Cash Management Series - - Effective Purchasing Strategies
This is the second in a series of articles focused on Cash Management. The first article discussed strategies for Managing Your Accounts Receivable while this article emphasizes Effective Purchasing Strategies. An important component of Cash Management is the purchasing process; buying the right goods and services at the right time, and with favorable terms. This article provides some Savvy Strategies for purchasing goods and services that will contribute to your company's profitability.
1. Take all early payment discounts: It should be a mandatory company policy to take advantage of all early payment discounts offered by your suppliers. Although the amount of money saved by taking the discount on each invoice may appear to be small, in the long term and on many invoices, these small sums add up to substantial savings. More importantly, the typical discount rate offered by your suppliers when evaluated on an annualized basis far exceeds the cost of borrowing money or the expected rate of return on other investment vehicles. For example, the standard term of "2/10 NET 30" is equivalent to an annualized 36%. It would be difficult to find a better rate of return on your company's money than this.
2. Negotiate special terms to stretch payments: Cash is king! Various payment options such as lower payments over a longer term, delayed payments, or a plan that allows you to pay after you receive payment from your clients can substantially improve the company's cash flow. Many vendors will be flexible about payment terms when they feel comfortable they will be paid in a timely manner, especially if they can be convinced there is the potential for a long term relationship with higher future sales volumes.
3. Assume everything is negotiable: Despite what you may believe, everything is negotiable - even existing contracts. Never pay the asking price! Companies motivated to sell may negotiate a "special deal" to stimulate sales, sell off slow moving inventory, report favorable quarterly financial results, or may have a sales rep that wants to achieve a bonus based on sales volume. Try re-negotiating all your current contracts. Contracts are re-negotiated for a variety of reasons including changing business conditions, new cost structure, poor economy, or a different business objective/vision. Those who ask, generally receive - those who don't ask, never receive.
4. Just in time ordering: This is a concept very similar to "Just in time manufacturing". Buy only what you need when you need it - don't buy for inventory or to "stock-up". Inventory that stays on the shelf is very expensive and consumes cash that could be invested in other high return projects.
5. Take advantage of all discounts through trade associations, chambers, and professional organizations: Many such organizations, because of their size, can negotiate favorable prices and discounts on many different types of goods and services. If these services are used frequently enough by your company, the accrued discounts could easily pay for the cost of the membership fees several times over. This strategy is particularly useful for small or medium size companies. Evaluate all these organizations, not only for the value of their affinity programs, but also for potential customer referrals and favorable exposure that could accrue for your company.
6. Only purchase items that add value to the product or service, or that increases productivity: There are endless opportunities to spend money. It appears every day some vendor is offering a "special deal" on some product or service that "you just can't do without". Oftentimes the offers are very enticing and alluring and appear too good to "pass up". However, conserving cash is paramount. Always ask - does it add value to the product or service we offer? Does it help reduce the cost of goods and services we offer? Does it save us time or money? Does it increase productivity? What is the real value of the "special deal"? There is a truism that states "The best deal is usually the one you pass up". Carefully evaluate all offers.
7. Keep orders to a minimum - but pounce on deals. This advice may seem contradictory to items number 4 and 6, but it does hold true in certain circumstances. If a "special deal" is being offered on a product that your company uses on a regular and frequent basis, then pounce on the deal. This timely action will save the company money in the long term.
8. Match purchases to the company's specific needs: If cans of peas are selling for $0.50 each or three for $1.00, which is the better buy? It depends on how well you like peas and how often you eat them. Multiply the prices in this example by a factor of 1000 for an inventory item that your company uses and the value of this decision becomes far more important. If all three items can be used in the near term, then the three are the better buy. However, if you can only use one of the items today and the other two stay on the shelf for the next year or two, then purchasing only the one item is the best buy. This prevents the company's money from being allocated toward assets that turn over slowly and makes cash readily available for other opportunities.
9. Delay some purchases: Do you really need it today? Is it really necessary? Review items number 4 and 8.
10. Negotiate hard: It pays to negotiate hard and to keep asking for concessions. Certainly, your supplier needs to make a profit, but they also want to make a sale. Sometimes just telling the truth is the best approach - "I'm just starting up", "I'm a small business", "Cash is tight right now", "You will be my preferred vendor", or "I may have a lot more future orders for you" may be just the strategy that will help you achieve a better price. It usually doesn't pay to accept the first offer. Several rounds of effective negotiation generally result in a more favorable price or better payment terms.
11. Buy second hand: Excellent bargains can be found in the newspaper or at auctions. The newest and the best are not always necessary. Highly functional and "almost new" assets can be found at bargain prices, especially during difficult economic cycles. The objective is to generate both positive cash flow and positive earnings that will maintain the long term viability of the company, not to have the "latest and greatest". Being frugal by purchasing secondhand items in the right areas saves cash and pays large dividends over the long term.
12. Barter: This is one of the oldest strategies in existence. Every company has something of value it could barter to a company that has goods and services you need. It could be a store front, a sales force, a mode of transportation, an intangible service, cycle time on a machine, a manufacturing or an administrative process, an employee with a unique skill, storage space or a tangible product - the possibilities are unlimited. Ask the other company what they need or what problem you may be able to solve for them - be creative.
13. Negotiate for items on consignment: As a strategy to help stimulate sales, many companies will allow your company to take products on consignment. If you are a retail operation, an online marketer, or a distributor, this may be an effective strategy for you. This is a low cost strategy for your company to generate additional sales without investing in inventory and will conserve cash as you pay only after you have sold the consigned item.
Apply the Savvy Strategies of "Effective Purchasing" to free up the cash for rapidly growing your business!
Take the next step! Explore the Business Checklists we offer that will help your business generate more revenue and become more profitable by visiting Business Checklists
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Ride Your Own Bus
"Ride your own bus" is an expression that means to experience your business environment in the same manner and under the same circumstances as your customers. It means trying to utilize your products and services under the same circumstances, attempting to do business with your company in the same manner, and looking at your company's policies and procedures in the same way your customers would look at them. Experiencing your customer's environment will give you a different perspective on how to improve your products and services as well as improve the business processes that establish the customer relationship.
As the story goes, in response to declining ridership and revenues the owner of a bus company decided to ride his own buses. What he saw was appalling. The buses were not clean and badly in need of repair. They ran behind schedule and the drivers were discourteous. As he struck up conversations with passengers, he discovered just how bad the bus service actually was. The passengers didn't feel safe, they were worried about reaching their destination on time, and were disgusted with the attitudes of the bus drivers. It was now obvious why ridership had declined. The business owner apparently made the necessary changes to turn things around and the story, as reported, had a happy ending.
Although the lesson to be learned by using the Savvy Strategy described in this story is clear, it is unfortunate that many entrepreneurs don't often receive the necessary feedback at the right time to remedy the customer's problem. I personally don't believe that many small and medium size business owners or the executives in a large company truly understand the customer's perception of the company's products and services, their policies for conducting business, or their employee's attitudes toward customer service.
As an example, several times I have personally called companies looking for information, only to be left on hold for an inordinate amount of time, transferred several times to other departments, or have been cut off. Frequently the employees of these companies made it clear that I was interrupting something that was more important, claimed it wasn't their job, or informed me that nobody was currently available to help. Promises of return phone calls never materialized nor did promises to send requested information. Even when I finally reached someone whose job it was to either resolve the problem or provide the correct information, they seemed to have neither the appropriate level of knowledge, nor the right customer service attitude. Invariably, this person had to receive permission from a higher authority before correcting the problem. Often it appeared that doing the daily 'busy' work was far more important than responding to a customer's request. This is not the path to providing customer satisfaction and building customer loyalty.
It appears that some technological advances that were intended to make communication more efficient are having just the opposite effect. Instead of improving the process, they are exacerbating the problem. Getting lost in the endless maze of voice mail options or finally getting to the right department only to connect to a voice mail message is quite frustrating. It seems that once you get 'locked in', the only way out is to 'hang-up' and call again while incurring the additional expense of another long distance phone call and wasted time. Because of numerous consumer complaints, some companies have removed their voice mail systems and replaced them with a human being. What a refreshing thought!
Why do these situations happen? I believe it is because business owners and executives have not taken "a ride on their own bus". They probably have never called their company's technical support center, had their car fixed in their company's repair shop, or called their company looking for product information. They perhaps have never ordered a product through their company's website, stood in line at their customer service department to return a deficient product, or used one of their company's Order Forms. Additionally, they most likely have never read their company's Service Agreement, Warranty, or Product Return Policy.
Try calling yourself using the same process a customer would use. In fact, go one step further and call your company's main telephone number just to determine how easy or how difficult it may be for a consumer to contact you. I believe it would be enlightening! Additionally, use your company's products in your own home and your place of business to determine if the products perform as promised. Try the products under many different conditions in the same way that a customer might utilize them. This experience may provide you with a very different perspective.
Try shopping in your own store or eating in your restaurant. If you have only one store or are easily recognized by your employees, have a 'secret' shopper evaluate your personnel, your methods of doing business, and your customer service policies. If you try to do this yourself, you may be biased by some of your own opinions or the employees that do recognize you will try extra hard to please you. This is not a real test. Have the secret shopper make both usual and unusual requests, have them return both damaged and undamaged merchandise, and have them be both pleasant and unpleasant to determine how your employees respond to this behavior.
Dissatisfied customers generally won't complain to you, but they will never be repeat customers. Instead, they will complain to their friends, relatives, and co-workers. This represents a large circle of influence and the potential for many lost customers. The customers that do complain are doing you a BIG, BIG favor. How you address their complaints will determine if they will continue to be your customers. Don't just address the specific problem, but also provide some extra product(s) or service(s). Turn this negative situation into one that creates a positive and lasting impression on your customer.
Use this as an opportunity to ask about other potential problems, their impressions of your employees, your product quality, and your customer service policies. This is a unique opportunity to conduct free market research. More importantly, this is the time to correct any problems before your reputation becomes tarnished. Once you have earned a negative reputation, it is very difficult, if not impossible to recover.
The Doctor, a 1991 film presented by Touchstone Pictures poignantly illustrates the concept of riding your own bus. A well-known, high paid, and caustic surgeon is insensitive to his patient's needs and concerns as he pushes them through myriad medical tests and eventual surgeries. The doctor is then diagnosed with throat cancer and is subjected to the very same kinds of insensitive treatment, administrative errors, inordinate amounts of time spent waiting in reception areas, short and curt answers, and being left in the dark regarding test results. After a frustrating treatment and recovery period, he realizes his error. When the doctor returns to his practice, he radically changes his philosophy to a more sensitive and empathetic manner. As part of his training responsibilities, he now requires that all new interns be subjected to many of the medical tests they will eventually be prescribing for their patients. This teaches the new surgeons empathy for their patients. Although it is only a story, it is a lesson that could well be learned by all business owners.
Savvy Strategy from this article:
Why do customers leave? There is always something that causes them to change their buying behavior. Perhaps it was a one-time event that caused the dissatisfaction, or it could have been a series of mis-steps by the business over a period of time. Oftentimes you will never know the real reason why. The customer usually won't complain, but instead will just silently and quickly "fade" away. However, it is interesting to note that business owners have direct control of 91% and partial control of 96% of all the reasons why a customer might take their business elsewhere. How are the reasons below impacting your company?
- 1% die.
- 3% move away.
- 5% follow a friend or relatives' advice and changes.
- 9% switch due to a better price or product.
- 14% switch due to a product or service dissatisfaction.
- 68% switch due to a perceived feeling of indifference on the part of the owner or employees, not being appreciated for their business, being treated as unimportant, or just being taken for granted
Source of these percentages is unknown.
Apply the Savvy Strategy of "Riding Your Own Bus" to your business before it is too late!
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Satisfaction Guaranteed
"Satisfaction guaranteed" is a phrase not commonly heard. Many senior executives and small business owners are afraid to offer this benefit to their customers and prospects. The primary reason for this is a concern that one may actually have to provide free products and services, or possibly refund hard earned revenues because of a dissatisfied or disgruntled customer with unreasonable expectations.
However, offering a guarantee is a bold approach that implies confidence in your company's products or the ability to deliver a service as promised. This may be just the Savvy Strategy that will set you apart from your competitors and will win you the order. Additionally, guarantees are an excellent strategy for gaining long term customer loyalty. If this is a strategy your company wants to implement, how do you structure a guarantee and what should you guarantee? At what point in the sales cycle do you offer a guarantee and what conditions should be included?
Product guarantees are much easier to offer and define than are service guarantees. With a product it is far easier to control the customer's expectations. You can define the product with technical specifications, determine how it is supposed to be used, specify performance levels, describe the circumstances under which it will function effectively, and when its use should be avoided. Also, it is generally easier to determine if a product has been abused or misused.
Service guarantees are much more difficult to define because the results are often intangible and personal satisfaction varies from individual to individual. What is acceptable and satisfactory for one person may not be so for another person even though the same level and quality of service was delivered to both parties.
I am familiar with an Organizational Dynamics Consulting firm that provides customized training for organizations on how to achieve high performance through organizational effectiveness and personal achievement. This firm has a unique way of conducting business. They offer a no-cost, no-obligation, organizational assessment to interested businesses. This assessment allows them to adequately determine how they might be able to help the customer. A proposal is then prepared that defines the services to be delivered, and, more importantly, establishes the appropriate customer expectations. If, for any reason, or at any time during the contract, the customer feels their expectations are not being met, the customer can cancel the contract and have all their payments returned. Conversely, this firm will, without hesitation, cancel a contract if they don't feel that the customer's commitment to the project is greater than theirs, or if they determine during the delivery of the services they are unable to fully achieve the customers objectives. This philosophy is explained prior to beginning any services and notifies the customer that satisfaction can only be achieved if both parties make a full commitment to achieving the pre-defined objectives.
This approach to offering a guarantee accomplishes several things. First, it conveys confidence to the customer that the firm can, and will, satisfy the client's objectives. Second, it gives the firm the confidence that once the customers' objectives are mutually defined and agreed upon, they can deliver. Third, if it is determined the customer is not satisfied in the early stages of a project, the losses can be minimized. Fourth, the firm has maintained complete control of the project, the customer's expectations, and the ability to cancel the project, if necessary, due to the customer's lack of commitment.
Some helpful hints for utilizing guarantees are as follows:
- Carefully evaluate the contract to determine if you can effectively deliver on all the requirements that will either meet or exceed the customer's expectations
- Only guarantee the contract to the maximum amount of the contract. If the contract has several definable phases, guarantee only the costs of each one of the phases you have completed. Do not guarantee against third party claims, lost wages, or lost productivity.
- Don't accept a contract unless you are absolutely certain you can deliver all the requirements.
- Define in writing, the customers expectations. The longer the contract, the higher the probability of changes in the customers original expectations. While memories tend to fade over time, a written agreement will help minimize potential conflicts and will serve as the baseline for discussion.
- Do not allow the customer to attach unreasonable requirements to the contract.
- Allow adequate time for completion of the contract. Always build-in a safety factor.
- Use a guarantee to your advantage by allowing it to serve as a motivator for you to perform at the highest level as well as an incentive to deliver on time. Sometimes the fear of a loss is greater than the desire for gain. Use this to your advantage.
- Don't guarantee what you can't guarantee. Only guarantee the events and circumstances you can control. If you have a one or two person business, it is much easier to offer a guarantee than if many people in your company are adding value to the project. This is also true if you have to depend on subcontracted services or other third parties to satisfy the requirements of the contract.
- Don't be alarmed by a customer who threatens to "call-in" their guarantee. They may be presenting you with a painful experience, but this situation can also serve as an opportunity in the form of a quality control mechanism or as forced market research. Use this event as an opportunity to receive feedback on the quality of your services and to determine if your services are truly meeting the needs of the marketplace. This will cause you to define the results more adequately that ou can guarantee on future contracts as well as the type of guarantee you will be able to offer.
- The guarantee should be in writing, easy to understand, and easy to execute.
- Never make the guarantee unconditional and all encompassing. Every guarantee has some qualifiers and should easily meet the "Prudent Man" test. It should not invite someone to take advantage of you. Most customers are generally quite reasonable, but the occasional customer looking for something for nothing still exists.
- The guarantee should be believable. Outrageous guarantees of recovering, for example, ten times the cost of your services if you can't deliver as promised are not reasonable, especially from a small or upstart company. Certainly, your client won't believe you can afford to offer this type of guarantee.
- The longer the guarantee, the more value it has to a customer, and the more security it conveys.
- It is not necessary to offer the same guarantee to all of your clients. Clients have different needs and varying levels of tolerance for risk. What is the key concern or underlying fear that you can guarantee for your customer or prospect?
Guarantees are most effective when you are either a new or a small company. Some clients may be reluctant to do business with an upstart that has little or no track record. This particularly applies to a home based business or a first time contract. The customer's perception of risk is far greater in these instances, and they will want some assurance you can succeed. Offering a guarantee may tip the scales in your favor. A guarantee is both their security blanket and your competitive advantage.
Many large companies don't offer guarantees because they have developed a good reputation for their products and services, have been in business several years, and have acquired many customer references. After your company has developed a reputation for excellent performance with good client references, you too will also want to consider minimizing and phasing out guarantees or eliminating them altogether.
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RETAIL STORE MANAGEMENT ARTICLES: |
I. Get Your Store Ready for the Holiday Season Series - - Setting a Sales Goal and Planning Successfully to Achieve It
A smart retailer wouldn't go into business without a business plan, nor should he/she enter into the holiday season, especially in a difficult economic climate, without a solid sales and marketing plan to ensure that he/she comes out of the holiday season in the black.
Now is the perfect time to formulate a holiday sales strategy, beginning with setting sales goals for the months of November and December. Equally important when considering these goals is to realistically predict what the net profit margin will be when markdowns and returns are factored into the equation. Once these goals are set, inventory levels can be planned accordingly, wholesale and retail pricing strategies formulated, and all efforts directed toward meeting these goals.
Now that the sales objectives have been established, how will these goals be met? Establishing an assortment and pricing strategy early in the season gives a retailer time to find the right inventory at the right price, with enough time to avoid last minute orders, rush shipping charges, and vendor shortages on popular items. Key items should be identified early and "magic price points" established so that adequate orders can be placed and sharp wholesale prices negotiated to meet the sales and profit goals set for the holiday selling season. Many customers adopt a price mindset when shopping for holiday gifts, such as "under $50" or "under $100". To address this mindset and to adopt the "magic price point" strategy, a holiday assortment might include a number of gift items priced at $49.99 or $99.00. Once orders for key items and gift items have been placed, retailers should try to secure co-op advertising dollars with their vendors to help to promote these items.
Special signage, display tables, and fixtures should be ordered well in advance of Thanksgiving weekend to ensure that holiday items are optimized and ready to sell on this traditional holiday kickoff weekend. Ordering sale signage which offers a point-of-sale discount, such as "25% Off", used in lieu of physical markdowns can prolong the regular price shelf life of an item, and save a retailer's profit margin.
During holiday time, it is important to evaluate the store's return policy and assess whether change is necessary to avoid post-season financial setbacks. Apparel retailers are hit especially hard after the holidays if seasonal merchandise is returned after demand for those items has dwindled. A beaded dress, for example, might sell at regular price through New Year's Eve, but in January would necessitate a hefty markdown. To offset these problems, a store's normal policy of issuing a cash refund with a receipt might be changed to "store credit only" during the months of November through January. Any changes in policy should be carefully and politely worded and prominently displayed well in advance of taking effect, to avoid surprising or offending loyal customers.
Another policy that can be implemented now to assist a small retailer in a difficult economic atmosphere is the commitment to meet competitor's prices on identical items. This gives customers the confidence and incentive to shop in the neighborhood rather than at the mall or big box retailer.
Now is also the time to consider holiday hours of operation and how that will affect the current staff, and whether additional staff will be necessary to cover the extended selling hours. Retailers should be advertising now for seasonal sales assistance and notifying current staff of any additional hours that will be required of them in the months to come.
A well-executed retail plan is unquestionably the key to a successful holiday season.
Retail Store Management and Marketing Checklist: Retail storeowners and managers can now conduct a thorough "Self-Assessment" of where their operations stand today, and then, based upon the results of this analysis, implement sound business strategies for accelerating growth, reducing unnecessary waste, and improving their store's profitability. This unique management tool features over 1,000 tactics, strategies, and action items for evaluating twenty-five different operational categories ranging from store image to customer service to marketing. The Checklist includes a simple process for helping you identify the highest priority tasks along with assigning responsibilities and due dates for completing each action item. This process is your personal management tool for tracking progress. Bring your retail store to the next level of growth and profitability by using this management Checklist today. To see how your store can benefit from this Checklist, visit Retail Management and Marketing Checklist
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II. Get Your Store Ready for the Holiday Season Series - - Planning a Successful Marketing Strategy
To navigate the rough waters of the competitive holiday selling season, especially in a difficult retail climate, a small retailer must plan and execute a successful holiday marketing strategy. The objective for every small retailer should be to make his store a holiday shopping destination.
Every retailer, large or small, should immediately create a marketing calendar to prepare for the crucial upcoming holiday selling period. It is an essential planning tool used to give a retailer a big picture glance of a month, indicating all the information germane to his business in the box allocated for each day of the month. A marketing calendar can include dates of sales, special events, daily volume goals, ad dates and media deadlines, special store hours, and any other information that will help the retailer to plan in advance for an upcoming important event. A marketing calendar can facilitate a team approach to reaching goals if displayed where all members of the retail team can access it. Any retailer can create a marketing calendar by using a regular calendar with large boxes for each day of the week. Marketing calendars are especially useful around the holidays in comparing sales results against previous years, as the holidays fall on different days of the week from year to year.
Now is the time to formulate a holiday advertising and marketing plan. Whether the plan includes traditional media advertisements, an email and internet campaign, or a multi-media approach, now is the time to plan those ads by identifying both key items and important promotional dates. Place orders now for samples of key items which will need to be photographed for catalogs, direct mail pieces, web pages, in-store marketing materials, and bag stuffers. During the critical selling months of November and December, all retailers should take advantage of free of charge email and voicemail marketing to supplement their holiday advertising schedules. A guest book set up on the cash wrap today can collect email addresses and phone numbers to build a database for holiday marketing campaigns. A successful holiday retail marketing formula should include frequent promotional events, weekly calls to action, updated web pages, a fresh and ever-changing merchandise presentation, and a memorable customer service experience.
Special services go a long way toward attracting holiday shoppers. Plan now to offer services such as complimentary gift wrapping, free shipping, or personal shopping services, which not only save shoppers money and time, but create invaluable word-of-mouth advertising. Advertising these holiday perks early can create a "buzz" and drive customers into the store.
Plan now to host a holiday special event, such as an open house or a sidewalk sale. Plan these events to coincide with increased foot traffic opportunities, such as a neighborhood holiday parade, or the lighting of a town tree or menorah. Holiday hospitality ideas can be put into motion, including plans for additional store and sidewalk seating, creating a coffee and hot chocolate bar, gift wrapping station or coat rack.
Holiday window displays should be planned early to ensure that materials are readily at hand during the holiday rush. Displays with movement are especially effective in capturing a customer's attention to any special items or promotional materials displayed in the window. Any additional display fixtures or visual aids needed inside the store to optimize holiday selling should be ordered now, well in advance of the Thanksgiving weekend.
Advance planning is the key to successful execution of a holiday marketing strategy.
Retail Store Management and Marketing Checklist: Retail storeowners and managers can now conduct a thorough "Self-Assessment" of where their operations stand today, and then, based upon the results of this analysis, implement sound business strategies for accelerating growth, reducing unnecessary waste, and improving their store's profitability. This unique management tool features over 1,000 tactics, strategies, and action items for evaluating twenty-five different operational categories ranging from store image to customer service to marketing. The Checklist includes a simple process for helping you identify the highest priority tasks along with assigning responsibilities and due dates for completing each action item. This process is your personal management tool for tracking progress. Bring your retail store to the next level of growth and profitability by using this management Checklist today. To see how your store can benefit from this Checklist, visit Retail Management and Marketing Checklist
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III. Get Your Store Ready for the Holiday Season - - Emerge in January with a Healthy Bottom Liney
Unless you're in a tropical climate, the January blues are a cold reality for just about everybody, especially small retailers. Gone are the merry customers and frenzied last-minute shoppers with their endless gift lists and deep pockets. With all the promise of the New Year, comes the reality of returns, markdowns, and holiday cleanup that can eat away at healthy holiday profits.
For savvy retailers, it doesn't have to be this way. Emerging from the holidays with a healthy bottom line lies in the ability to act proactively in season and address any potential issues before they become problems.
Begin by acknowledging that very few people have any shopping money left in January, so attempting to clear out large quantities of excess inventory in January is an exercise in futility. Therefore, it is imperative to carefully manage inventory levels in December, to ensure that by Christmas Eve, the bulk of the holiday merchandise has been sold. After-Christmas sale events can certainly help to liquidate inventory but should not be counted on too heavily to alleviate major inventory problems.
The best way to manage inventory levels in season is to get an accurate early read on seasonal purchases. Talk to your customers, shop the competition, and monitor early sales of key holiday items. If you've made a mistake or overcommitted, address it immediately with the vendor, and negotiate a return or a trade for more saleable goods. If the vendor will not accept a return or trade, negotiate a lower wholesale price in order to promote the item at a more attractive retail. Most vendors realize that your businesses thrive together on mutual cooperation and satisfaction.
It is imperative to enter into the holiday season with healthy margins on purchases, especially in a difficult retail climate. If sales are slow in season, adopting a promotional sales strategy will quickly eradicate any post-season profit potential for retailers operating on a simple "keystone +$2" markup formula. If a promotional strategy becomes necessary, don't wait until January or Christmas Eve to mark goods down, as shoppers won't necessarily wait and will probably go elsewhere for a better deal.
Adopt strategic store policies that both encourage customer loyalty and mitigate post-holiday profit erosion. These can include adjusting the return and exchange policy during the holiday months to allow "store credit only" or "designated holiday items not returnable" or "final sale." Consider advertising a policy to meet competitors' pricing on identical merchandise.
Plan to cut post-holiday costs by decreasing staff hours immediately following the after-Christmas sale event. Notify staff well in advance of post-holiday schedule changes to avoid causing hurt feelings or unplanned financial hardship.
Most importantly, plan to refresh the store with an exciting new merchandise assortment and visual display, immediately following the holiday rush. Once the holidays have passed and the New Year is approaching, customers are moving on to the next thing, and the store should reflect that forward motion. Fresh colors, Spring season, and Valentine themes in-store and in window displays, create positive feelings and reasons anew to enter the store. Purchase conservatively, however, mindful of the fact that January is traditionally a low volume selling month.
A combination of proactive inventory management and diligent focus on the bottom line are the key components of a financially successful holiday season.
Retail Store Management and Marketing Checklist: Retail storeowners and managers can now conduct a thorough "Self-Assessment" of where their operations stand today, and then, based upon the results of this analysis, implement sound business strategies for accelerating growth, reducing unnecessary waste, and improving their store's profitability. This unique management tool features over 1,000 tactics, strategies, and action items for evaluating twenty-five different operational categories ranging from store image to customer service to marketing. The Checklist includes a simple process for helping you identify the highest priority tasks along with assigning responsibilities and due dates for completing each action item. This process is your personal management tool for tracking progress. Bring your retail store to the next level of growth and profitability by using this management Checklist today. To see how your store can benefit from this Checklist, visit Retail Management and Marketing Checklist
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RESTAURANT MANAGEMENT ARTICLES: |
Keep Diners Coming Back to Your Restaurant for More
Smart restaurant marketing strategies will keep your diners coming back for more. Retaining an existing customer for your restaurant is far easier and much less expensive than attracting a new diner into your establishment. Some restaurant marketing studies have shown it can take up to six times more in marketing and acquisition costs to generate the same amount of business from new diners than from your existing customers. Additionally, it can take many months, or even years, before a new customer will reach the same spending levels as your current customers. What's more, loyal customers will become your best salespeople through word-of-mouth advertising and referrals, resulting in new customers without the additional customer acquisition costs. In other words, both losing existing customers and investing in new customer acquisition activities are very expensive propositions for restaurant owners and managers.
Fortunately, there are many strategies that restaurant management can utilize to meet constantly evolving customer expectations, sharpen management's competitive edge, and yield more repeat business. Today's diners create a difficult challenge as they demand personalized products and services. They want to be engaged by the restaurateur. Customer loyalty or customer frequency programs help restaurant managers deliver on those high expectations, retain existing diners, and create more opportunities for new visitors. Consumers often say they are more likely to patronize a restaurant that offers some type of rewards program. It is estimated that approximately 90% of Americans actively participate in some sort of a loyalty or rewards program as is evidenced by frequent flyer programs, frequent hotel stay rewards programs as well as frequent shopper programs implemented by supermarkets, drugstores, and office supply stores.
A loyalty program allows a restaurateur to create a special relationship with their customers. It is not an event; it is a systematic process for changing your customer's behavior so they frequent your restaurant more often, and even spend more money while they are dining. By providing incentives unique to your restaurant, you 'hook' them so they visit your restaurant rather than patronize the competition. Just make it easy to participate in your program, have only a few very simple rules and don't make it too difficult to earn the rewards. In fact, the quicker a diner can 'collect' a reward, the more likely they are to patronize your restaurant.
Importantly, the technology behind internet based marketing and loyalty programs is becoming more affordable and accessible to restaurants of all sizes. Building a restaurant loyalty marketing program is a three-step process. Email clubs are a cost-effective first step. Launching an email club helps build your customer email database, which can later be used for more encompassing loyalty programs, and it allows opportunities to boost sales. An email database of customers who have opted-in to your list can be a gold mine; these customers will generally buy more often as well as spend more money on each transaction.
Frequency or card-based programs are the next level, capturing data that allows for segmentation of customers by frequency and spending habits. This in turn provides valuable business and marketing information. The highest level loyalty program creates true opportunities for personalization by using all these tools to ascertain what your best customers are buying so you can create offers and programs especially for them.
With a well-designed and well-maintained program, you can reward and retain truly loyal diners as well as create a reason for a new diner to come to your restaurant. This is a smart restaurant marketing strategy.
Restaurant Marketing and Management Checklist: Restaurant owners and managers can now conduct a thorough "Self-Assessment" of where their operations stand today, and then, based upon the results of this analysis, implement sound business strategies for accelerating growth, reducing unnecessary waste, and improving their restaurant's profitability. This unique management tool features over 1,425 tactics, strategies, and action items for evaluating thirty-two different operational categories ranging from restaurant image to customer service to marketing. The Checklist includes a simple process to help you identify the highest priority tasks along with assigning responsibilities and due dates for completing each action item. This process is your personal management tool for tracking progress. Bring your restaurant to the next level of growth and profitability by using this management Checklist today. To see how your restaurant can benefit from this Checklist, visit Restaurant Management and Marketing Checklist
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A Few Simple Change's for Your Restaurant can Pay Big Dividends
Sometimes a few very simple changes to the way you manage your restaurant can make a big difference in both employee morale and your bottom line. What are some of the simple changes you may want to consider?
Make Money by Saving Money: Oftentimes it is easier to save money than it is to earn money. Every dollar you earn, but don't spend, is a dollar that you don't have to earn again. Although the old adage is true that you have to spend money to make money, how you spend and invest that money is critical. If the margin on your sales is 20%, then for every dollar spent, you must earn five times as much, or $5.00, just to receive the original dollar back. There are endless ways to spend or invest, but which opportunity gives you the highest and best return? Also to be considered is the payback period. In other words, how long will it take to recover your investment? Two different investments may have the same returns, both dollar wise and percentage wise, but the one that recovers your funds the quickest may be the best investment. Plan ahead, evaluate your spending and invest wisely.
Looks do matter: Another old adage is that "You don't get a second chance to make a good first impression". Everything makes an impression; from your restaurant's signage to the wait staff's attire to your website's layout. It all has to be appealing to each of your customers' senses. With the very first look or first impression, your prospects will begin forming judgments and opinions about you, your employees, and the quality of your menu items. Once given an unfavorable impression, it will be very difficult to win them over and secure repeat business. A key strategy would be having an independent third party dine at your restaurant and have them "honestly and brutally" give you their first impressions. Because you see your restaurant every day, you can no longer impartially see what a customer can see. An independent third party can give you a completely different perspective. Alternatively, you could use one of the commercially available business assessment tools or checklists to conduct a self-assessment of your operations. This can save you a lot of time and money.
Employees Have Great Ideas: Involve your employees in the decision making process. Employees will be far more supportive, motivated, and productive with new initiatives or programs when they have participated in the decision. Even if some of them initially dissented, they will know their input was valued and they will typically respond positively. Because they directly interface with customers or participate in some other important business activity, they have unique insights and valuable ideas that can be leveraged to help your restaurant become even more successful. Have that meeting today!
The "Blame Game" has no Value: Don't play the Blame Game. This is an important adjunct to the above paragraph regarding employee participation. Be certain the focus of employee participation meetings is to solve problems and create high value programs, not just to cast blame on employees for things that are not quite up to par. It is much more productive and far less expensive to focus on first solving a problem than to waste time trying to figure out whose fault it may be. Oftentimes, it is no one's fault; it may be the process, faulty equipment, or a simple misunderstanding of the objectives and responsibilities.
Making a few, inexpensive changes to your restaurant's operations can oftentimes make a big difference, not only with enhancing your diner's experience, but with profitability and employee morale improvement as well. And, importantly, these changes don't have to cost very much.
Restaurant Management and Marketing Checklist: Restaurant owners and managers can now conduct a thorough "Self-Assessment" of where their operations stand today, and then, based upon the results of this analysis, implement sound business strategies for accelerating growth, reducing unnecessary waste, and improving their restaurant's profitability. This unique management tool features over 1,425 tactics, strategies, and action items for evaluating thirty-two different operational categories ranging from restaurant image to customer service to marketing. The Checklist includes a simple process to help you identify the highest priority tasks along with assigning responsibilities and due dates for completing each action item. This process is your personal management tool for tracking progress. Bring your restaurant to the next level of growth and profitability by using this management Checklist today. To see how your restaurant can benefit from this Checklist, visit Restaurant Management and Marketing Checklist
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Using Checklists To Eliminate The "Oops" Moments In Your Restaurant
Have you ever encountered the "Oops" situation in your restaurant? Ever said "Oops" when the customer got the wrong meal, when a reservation wasn't written down, or when the table setting wasn't correct? We all have experienced an "Oops" situation, and we know how that feels as well as what it costs. Using checklists can help to reduce the number of "Oops" moments.
As a restaurateur, you're faced with managing a number of areas that directly contribute to your profitability, including the dining room, take-out window, bar and lounge, function room(s), kitchen, storage, administration, marketing and employees. By managing each of these areas carefully and attentively, you can derive maximum profits out of each. Effectively using checklists can help you better serve customers, manage food and bar costs, pass inspections, and achieve increased profitability.
Checklists are a key component of a successful restaurant operation. Utilizing checklists leads to higher profits, more efficient and productive operations, satisfied customers, and a better quality of life for you and your employees. This article addresses the use of checklists in a restaurant operation and how checklists contribute to profitability. Let's take a look at some of the major functional areas of a restaurant operation and see how checklists can be applied to improve overall profitability.
Food and Bar Service: This includes all services provided to or on behalf of the customer: greeting and seating, taking and delivering the order, collecting payment, busing and resetting, and prep work. Checklists provide a well-defined process to ensure the customer is greeted properly, seated and served correctly, and high service standards are maintained. Checklists are vital to consistent service, efficient operations, and controlling costs with the ultimate goal of customer satisfaction and high repeat business.
Kitchen and Food Storage: The chef runs the kitchen and usually has his/her unique way of doing things, including ordering the food and setting the menu. It's important, however, to have checklists available, not only to remember what to do, but also to help a last minute replacement or a new hire. In addition to managing food costs, good checklists keep the kitchen productive and efficient by managing food supplies, defining operations, and describing proper food preparation.
Operations: Everything required to run the restaurant and not mentioned elsewhere, is typically called "operations". This includes accounting, advertising, banking, budgeting, cleaning, opening and closing, ordering non-food items, handling money and reporting. Using checklists here is important to ensure this work will be done in the correct manner and that nothing will be missed. When you're not around and must trust someone else to complete the work, a well-designed checklist ensures all the work will get done.
Employees: Turnover is always an ever-present issue in the restaurant business as are the numerous government reports and regulations regarding employment. Checklists can be utilized to minimize time spent on reporting, maintaining files, hiring and training new employees, and dismissing employees. Doing it right avoids problems later, problems that can be time consuming and costly.
The value of using checklists in your restaurant is to operate productively and efficiently, keep costs low, and make a profit. As we've discussed above through examples, checklists can be used in all facets of a restaurant operation. Checklists help to organize tasks, manage time, operate more efficiently, avoid excess costs and wasteful ways, and ensure compliance with laws, policies and procedures. Checklists can be developed internally, can be purchased through a commercial source, or purchased and modified to meet your specific requirements. Creating comprehensive checklists can be time-consuming for both the manager and the staff as well as taking you away from other more important responsibilities. However, utilizing a commercially available checklist that has been tested by many other restaurateurs can save you a lot of time and money.
Well-designed checklists will keep you and your staff focused, increase operational efficiency, and eliminate the "Oops" moments for your customers!
Restaurant Management and Marketing Checklist: Restaurant owners and managers can now conduct a thorough "Self-Assessment" of where their operations stand today, and then, based upon the results of this analysis, implement sound business strategies for accelerating growth, reducing unnecessary waste, and improving their restaurant's profitability. This unique management tool features over 1,425 tactics, strategies, and action items for evaluating thirty-two different operational categories ranging from restaurant image to customer service to marketing. The Checklist includes a simple process to help you identify the highest priority tasks along with assigning responsibilities and due dates for completing each action item. This process is your personal management tool for tracking progress. Bring your restaurant to the next level of growth and profitability by using this management Checklist today. To see how your restaurant can benefit from this Checklist, visit Restaurant Management and Marketing Checklist
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