There are almost always warning signs before a business failure occurs. As long as you use your common sense you will be able to read the signs and act to avert major problems.
Some of the following warning signs apply only to small shops, but most apply to all businesses. If you notice a downturn, ask yourself why your business has been affected and take positive action in one or more of the areas listed to correct the situation.
Once you set your business on the right track, check these points regularly and you should go from strength to strength.
Customer Relations
• Have old customers stopped coming?
• Are your customers returning more merchandise than previously?
• Are sales down on last year’s sales for the same period?
• Has the average sale per customer dropped or decreased?
Action
• Your stock may be wrong for your customers, badly priced or unattractively displayed.
• Your staff may not be using good selling techniques.
• Write to former customers inviting them to visit your rejuvenated store to view your new, exciting stock.
• Train staff to maximise sales (sell up and companion sell).
Staff
• Are your staff slow to greet customers?
• Indifferent to customers’ needs? Are your employees (and you) clean, neat and tidy?
• Does your staff have sufficient knowledge about your merchandise to answer customers’ questions intelligently?
• Are your most qualified employees leaving to go to your competitors? Do customers complain about staff indifference?
Action
• Have your staff and yourself trained in customer relations.
• Make sure staff is conversant with details on goods they have to sell.
• Treat your staff well and reward good service.
• Dismiss inefficient or disinterested staff, but first consider if they could be used in another area (the worst salesperson might make the best bookkeeper).
Display and Merchandising
• Has the window display been there for months?
• Is the merchandise in the window boring and badly arranged?
• Are your stock, shelves, racks and counters dusty?
• Are there obstacles in the aisles preventing easy access?
• Are goods being damaged by mishandling in storage and display areas?
Action
• Change your window regularly with interesting goods.
• Keep your shop clean, neat, well-lit and attractive.
• Keep aisles clean and access to goods easy.
• Handle and store your stock with care to avoid damage.
Money
• Are you being penalised for late payments?
• Do you draw more for personal use than the business can afford?
• Has your bank balance reduced over a period of several months?
Action
• Do not allow your debtors to be overdue with their accounts.
• Never jeopardise your business to satisfy personal needs; only take out what the business can afford.
• Ask your accountant’s advice about handling your business finances.
Stock
• Are your prices out of line with similar goods sold by competitors?
• Is your storeroom full of slow moving stock and you, therefore, do not have sufficient funds to buy replacements for good sellers?
• Do you act quickly to mark down stock when styles change?
• Can you take advantage of discounts offered for early payment?
Action
• When pricing goods be aware of market prices - why should customers pay you more than they pay elsewhere?
• Be aware of colours and styles that are slow sellers - mark them down to move them - avoid repurchasing similar goods. It is better to order too little than too much stock - you can pick up small orders or new stock to satisfy needs.
• Take note of any discounts on stock offered by suppliers and take advantage of them.
Records
• Are your personal expenses paid from your business cheque account?
• Do you know if customers are behind on payments?
• Do you know what the average stock turnover is for your industry and if your stock turn is below that average? Do you know if your gross profit compares well or badly with the average for your type of merchandise?
Action
• Draw one cheque for all your personal needs each week or fortnight - do not take any other money from the business for personal use.
• Obtain a copy of “A Guide to Keeping Your Business Records” from your nearest Australian Taxation Office.
• Send out invoices and statements on time and follow them up to avoid ageing.
• Industry profit averages and stock turn are available for your use - enquire from trade associations, suppliers or accountants.
• Learn to read your business records and act on what you read there - ask your accountant to help you.
Management
• Do you find unexpected bills for the business coming in?
• Do you have to sort out piles of invoices and receipts to figure out your financial position?
• Do you understand your taxation options and obligations?
Action
• Draw up a budget for the year showing known expenses and likely income. Use it to plan cash flow.
• Keep a cash book, reconcile your bank statements against it and talk to your accountant about other basic records to keep.
• Talk to your accountant at the beginning of the tax year. Do some basic training in financial management at the BEC at Illawarra ITeC. The time you invest will repay you many times over.
FREE ATO WORKSHOP
Record Keeping Workshop
Who should attend?
Small l business operators who desire a better understanding of the basic concepts of record keeping for their business, including taxation issues.
Why should you attend?
You will be taken through cash receipt and cash payment record keeping and complete a Business Activity Statement (BAS). By the end of the work shop you will be able to complete your own BAS when the time comes.
Please note bookings are essential as places are limited to 25 people
Time : 9:30am to 1:30 pm
Date Wednesday 8th October – Nowra Office
Wednesday 22nd October – Wollongong Office
Cost : Free
RSVP : 1300 650 058
MARKETING WORKSHOP
It is not enough to just have a fantastic product or service; you also need to be able to understand how to market your product or service to potential customers and clients.
This two hour workshop will help you understand the different aspects of marketing, help you understand how your product / service fits into the whole market and how you can market your business more effectively? We will discuss:
• Conducting Market Research
• Who is Your Target Market / Competitors
• The Four P’s of Marketing
• SWOT Analysis
• Requirements of Developing a Marketing Plan
Time : 12 noon to 2.00pm
Date : Friday 31st October 2008
Cost : $40.00 – light lunch included
Do you receive our weekly Illawarra ITeC Small Business News Newsletter? If not, email Virginia today on ibec@illawarraitec.com.au and we will automatically send you a copy.
This is only a brief outline of the types of small business advice and assistance that we can offer. Want to know more? Remember I am a FREE service and can assist you in developing your business in many ways. Call me today on 42233100 or check out our website at www.illawarraitec.com.au
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