Business Tips & Info

What Covid strategies are you planning?

• Targeting new markets.
• Introducing innovative products and services.
• Moving to on-line channels.
• Working with new prices, costs and margins.
• Reorganising staffing levels, responsibilities and management structures.
• Establishing remote office operations.
• Changing premises and/or infrastructure.
• Sourcing to new contractors and suppliers.
• Investing in new technologies and systems.

Does your Covid budget:

• Examine sales and margin projections across your customer base.
• Set targets for achieving new customers.
• Estimate the costs of staff and subcontractors
• Review your pricing options
• Project your overhead and investment costs
• Calculate the break-even levels and profit targets
• Determine your cashflow, repayments and funding requirements

Does your Covid Business Plan document:

• The direction and focus of the business
• The short and long-term objectives
• Which customers and markets to target
• What products and services to market?
• How to market, promote and sell them
• The need for new staff, expertise and resources
• How to manage the business going forward
• What changes in premises, technology and infrastructure will be needed?

A Marketstrat Consultant can help facilitate and support this process by:

• Providing templates, structure and professional support
• Helping the facilitate the discussion of options and ideas
• Supporting with ideas and suggestions
• Documenting the process
• Providing an independent viewpoint

This is a challenging period with so much uncertainty.

1. How has your business been impacted?
2. Is your business still profitable?
3. How much support have you been able to get from the government?
4. Are you able to keep up with your repayment commitments?
5. Have your fixed cost expenses and repayments increased or decreased?
6. How have your staffing levels and costs changed?
7. What would your sales and margins need to be to cover costs?

The above example could help you to examine the impact and plan ahead:

1. In the year before Covid it had a $20,000 profit, $6,000 repayments and a $14,000 surplus.
2. The direct costs were constant at 70% of sales giving a gross profit of 30%.
3. During the Covid year:
   • The sales dropped by $60,000, from $200,000 to $140,000.
   • The overheads reduced from $40,000 to $37,000 but not enough to prevent a deficit of $1,000.
   • The $10,000 government subsidy helped the business to recover a surplus before tax of $9,000.
4. In the post-Covid year, the business is aiming to make a $12,000 surplus after repaying the loans.
   • The sales are projected to increase above pre-Covid level to $220,000.
   • The overheads have increased to $44,000 with additional marketing and staffing costs.
   • The loans have increased from $6,000 to $10,000 with the purchase of new equipment.
   • The Government subsidy has stopped.
5. The new post-Covid breakeven sales target is $180,000.
   • The overheads are now $44,000
   • The loan repayments are $10,000

This business will now target $220,000 in sales but it must achieve $180,000 to avoid a deficit,

An effective Business Plan requires an equally effective Budget.

The objectives and strategies detailed in the Business Plan need to be quantified in a Budget format to evaluate the impact on profitability and cashflow. This can then be compared with the actual performance of the business to enable further analysis and adjustment throughout the implementation period.

The budget will provide a financial critique of the Business Plan including:

1. The projected rate of growth and profitability throughout the period.
2. The sales targets and the costs of the planned sales and marketing strategies.
3. The timing and financial impact of the anticipated changes in staffing levels and overhead costs.
4. The viability of investing in new plant and equipment.

Ideally, the Budget will include a Cashflow analysis to project the funding that will be required to implement the Business Plan. This can include:

1. Financing the set-up costs and periods when financial losses are expected to occur.
2. Funding increases in debtors and inventories.
3. Investing in research and development.
4. Purchasing new plant and equipment.
5. Repaying loans.
6. Meeting tax commitments.

Our observation is that a Budget analysis strengthens the integrity of a Business Plan, conveying a clearer understanding of the financial imperatives and what the organisation wants to achieve.

A Marketstrat Business Plan normally includes a monthly and annualised budget covering a 3 year period. The budget targets, assumptions and strategies are integrated into the Business Plan objectives, strategies and implementation process.

A Marketstrat Business Plan normally includes a monthly and annualised budget covering a 3 year period. The budget targets, assumptions and strategies are integrated into the Business Plan objectives, strategies and implementation process.

A Marketing Plan specifies the revenue and margin targets that a business wants to reach and the sales and marketing strategies that need to be implemented to achieve them.

A Business Plan will include a marketing strategy section which will be aligned with the strategic direction, objectives and resource capabilities of the business.

The Business Plan will specify how the marketing strategies will be resourced from a people, specialist supplier, infrastructure, strategic alliance and funding perspective. It will prioritise and schedule the implementation process for ongoing review and adjustment.

Our observation is that a Business Plan which encompasses a fully integrated marketing section and a supporting sales and marketing budget is optimal from a planning, resourcing and implementation perspective.

Marketstrat can help you prepare a Business Plan, Marketing Plan and a detailed set of Budgets in whichever combination that will best meet your specific requirements.

Our business consultants are based in the Sydney region and we would welcome your enquiry.

Meeting customer needs requires empathy, lateral thinking and research.

A key sales and marketing objective is to fully understand “what do customers really want”.

Marketing “customer needs” rather than “products” can potentially support innovation and create new opportunities. This is illustrated in the following two examples.

Newspapers:

• A publisher sells “newspapers” (product)
• Readers want “information” and “entertainment” (customer needs)

Retailers:

• A retailer markets a shop, department store or supermarket (product)
• Customers want to make a purchase with their preferred mix of “convenience”, “value for money”, “customer service, advice and support” and “shopping and entertainment enjoyment experience”.

A deeper understanding of customer needs and “what they really want” can potentially increase the scope and opportunities for you to develop innovative sales and marketing strategies.

Our observation is that it is too easy to simply work with traditional interpretations of customer needs as these can be too narrow and miss opportunities to target new market segments with innovative marketing strategies that will achieve a competitive advantage.

A Marketstrat business consultant, based in the Sydney region, can provide an objective review of how your customer needs are defined and assist with the creation of new market segmentation, sales and marketing strategies that can be integrated into a Marketing and Business Plan.

Position descriptions are a very cost-effective management tool when they:

1. Clearly define the role and responsibilities of each position.
2. Specify the required skills, qualifications and capabilities that are required.
3. Assign each organisational task to a position.
4. Ensure that the “baton change” between positions is seamless and transparent.
5. Are flexible and aligned to the changing needs of the organisation.
6. Are embedded into the personnel systems and procedures.
7. Are valued and implemented by all levels of management.

Job descriptions will define the skills and responsibilities of each position and can be used as a checklist to:

1. Define the role and appraise the suitability of an applicant in the selection and recruitment process.
2. Review the performance of each employee in completing their assigned responsibilities.
3. Direct the staff training strategies that need to be implemented to achieve maximum individual and team performance.
4. Structure and explain career path opportunities for employees.

A Business Plan will define the organisational structure, the positions and how they integrate and need to change over time to achieve the organisation’s goals.

Our observation is that position descriptions are an inexpensive and valuable management tool which is not always used to maximum advantage.

A Marketstrat business consultant, based in the Sydney region, can assist with a review of your organisational structure and job descriptions to support the changing needs and growth of your business. A supporting Business Plan and Budget can help plan the optimal timing of personnel changes from a strategy implementation and financial perspective.

Challenging, but achievable budgets and cashflow projections can greatly assist the planning, strategy development and financial management of an organisation.

Ideally, budgets and cashflow projections are used to quantify the Business Plan’s objectives and strategies and evaluate their financial impact upon the organisation’s growth, profitability and cashflow.

Budget Sales Projections. Preferably, these should be dissected into unit and dollar revenue targets for each market and aggregated into monthly and annual totals with margin and gross profit projections. This will help management to evaluate and compare alternative growth strategy options.

Budget Cost Projections. When the costs of resourcing and implementing the marketing, staffing and infrastructure strategies are included in the budgeting analysis, the viability and timing of each strategy decision can be analysed and compared.

Cashflow Projections. A supporting cashflow analysis will estimate the funding that will be required to finance debtors, stock, asset acquisitions, loan repayments and taxation expenditures. New businesses and organisations with significant growth projections, while profitable, can run into cashflow and financial difficulties if the funding of set-up costs, working capital and taxation payments are not adequately resourced.

Our observation is that budgets and cashflow projections are not always structured in a way that will enable management to compare and analyse alternative growth strategy options.

A Marketstrat business consultant, based in the Sydney region, can assist with the structuring and preparation of a fully integrated budget which can be used to support strategy decision making. This will be aligned with the organisation’s financial accounts to monitor the financial performance of the organisation against the projections and support the Business Plan.

Creating and receiving client referrals is a very cost-effective sales and marketing strategy.

Ongoing client referrals indicate that your customers are satisfied with your products and services and are happy to recommend them as a qualified referral.

Referrers need to be identified, tracked, acknowledged and supported.

Depending upon the referrer, strategies and tools to make the referral process easier include supplying brochures, web-site links, posters, displays and possibly staff training.

Effective referral marketing begins with a tracking system which records and analyses the source of new clients. The grouping of referrers into categories is useful in planning and implementing effective referral marketing strategies. The groupings can include:

• Existing customers.
• Organisations marketing complementary products and services.
• Incentivised and commission-based referrers.
• Suppliers.
• Strategic alliances.
• Government agencies.

Referrers can also provide valuable feedback. It is useful to know what they like about our products and services and how they promote them. They may also provide suggestions on how our products and services can be improved along with information about competitors.

Our observation is that referral networks often needs to be given greater focus and managed with a more-effective structure.

A Marketstrat business consultant, based in the Sydney region, can assist with a review and development of referral marketing strategies and including them in a Marketing and Business Plan.

Mark-up percentages and gross profit percentages and how to calculate them needs to be clearly understood when pricing policies and budgets are being prepared.

Direct Costs are the cost of producing an item. In accounting terms, this is also called the “cost of goods sold”. In other words, when the item is sold the direct costs (cost of goods sold) is the cost to the business of producing it. For example, if a case of oranges cost $80 and are sold for $100, the direct costs are $80 and the gross profit margin is $20.

Mark-Up Percentage is the gross profit margin of an item expressed as a percentage of the cost of the item. In the example above, the cost of the item is $80, the selling price is $100 and the margin is $20, the mark-up is calculated by dividing the $20 margin by the $80 cost expressed as a percentage which is $20/$80 = 25%.

Gross Profit Percentage is the gross profit (sales less the cost of the item) expressed as a percentage of the selling price or sales. In the above example, this would mean dividing the gross profit of $20 by the selling price of $100 to calculate a gross profit percentage of 20%.

Sales & Gross Profit budgets use the gross profit percentage to calculate the gross profit from the sales projections. For example, if the sales for a period are projected to be $10,000, the gross profit in dollars would be the sales of $10,000 multiplied by the gross profit percentage of 20% which is $2,000. The Direct Costs (cost of sales) would therefore be $10,000 less $2,000 which is $8,000. Expressed in percentage terms, 100% sales less 80% cost of sales gives a gross profit of 20%.

The following table shows some comparison calculations.

Our observation is that the calculation of mark-up and gross profit percentages can be confusing. Sales budgets are much more valuable if the gross profit percentages are used to calculate and compare gross profit projections.

A Marketstrat business consultant, based in the Sydney region, can assist in the calculation and comparison of mark-ups and gross profit percentages and in the preparation of effective sales, margin and profit budgets

The decision whether to use a Business Plan Consultant in preference to using a business plan template parallels with using a “do-it-yourself” (DIY) option in other purchase decisions.

The DIY Business Plan has obvious cost advantages but it may not give you real benefits or value. The underlying factor is the importance you are placing upon the business plan”, what you want from it and how you intend for it to be used.

If the business plan will be used internally and/or externally to help you to direct, plan and evaluate the successful growth and development of your business it is likely that it will be highly valued and you will be prepared to invest more time and money into creating and using it. In this scenario, the decision to invest in a Business Plan Consultant is more easily justified.

A competent and experienced Business Plan Consultant can potentially provide these benefits:

1. The business plan is completed by a professional with specialised expertise in this discipline.
2. An independent, rigorous and objective perspective is introduced.
3. A Business Plan Consultant can challenge your ideas, identify new opportunities and threats to the business and suggest alternative strategy options for your management team to consider.
4. They can bring business experience from other clients and industries.
5. A structured planning, review and evaluation process can be more easily and effectively put in place.
6. The Business Plan structure can be more easily be customised and aligned to your business.

Our observation is that Business Plan templates tend to be too descriptive and do not adequately define the strategies that need to be budgeted, resourced, prioritised and delegated.

A Marketstrat Business Plan Consultant has the expertise to add significant value and experience to your business through the business planning, budgeting and review process.

Setting up a new small business is a daunting but exciting venture.

Defining who your customers are is the most important place to start. Ideally you will already have “lead customers” who you know will be the first ones to buy your products and services.

Researching your competition and defining what is special about your offering is necessary to ensure that your product or service will be preferred over others. This is your “unique selling point” (USP) and depending upon your type of business, could be based on:

• Product and service features
• Quality
• Convenience
• Hours and availability
• Purchase options
• Visibility, point-of-sale and demonstrations
• Packaging presentation, functionality, configuration and options
• Advertising and promotional campaigns
• Referral network and contacts
• Sales approach
• Customer service
• Personal and technical advice and support
• Tendering and submission expertise
• Pricing, quoting and proposals

The preparation of a realistic monthly sales and profit budget will help you to set financial targets for your business. This is vital as many new businesses do not do this well and suddenly find that while they may be profitable, they have run out of money. Funding a new small business can be more than expected. The set-up costs can blow-out, the sales projections can be too optimistic and the funding of debtors and stock may be underestimated. A budget will help you to test to your ideas from a financial perspective and enable you to compare different scenarios.

Once your budget has been finalised, a Business Plan can help you to formalise and explain:

• The direction and goals you have for the business
• Where and how your business will be set-up
• Who the customers will be
• What will be your products and services and how they will be marketed
• Your prices, costs and margins
• Who will be employed and what their responsibilities will be
• How your products and services will be provided to customers and supported
• Who will own the business, the legal structure and how it will be funded

As a matter of caution, if you are setting up the business with someone else, it is very important to have a Partnership or Shareholders agreement prepared by your solicitor before you start.

As a matter of caution, if you are setting up the business with someone else, it is very important to have a Partnership or Shareholders agreement prepared by your solicitor before you start.

A Marketstrat business consultant, based in the Sydney region, can help you to plan your new small business with the preparation of a detailed monthly and annual budget analysis and a fully integrated Marketing and Business Plan.

It is important to know that a market for your products and services exists before investing in the resources that will be required to produce them.

A real trap is to set-up a business or enter a new market believing that customers will want to purchase your products and services without validating this.

The best strategy is to establish and work with a small number of “lead customers” who can provide feedback on your ideas and possibly test prototypes and samples. They may be incentivised with discounted prices, exclusivity, special support and upgrade arrangements.

Feedback can also be obtained from employees and trusted contractors, particularly those who have direct contact with customers. These include people working in sales, customer service, deliveries, installations, warranty claims and technical support. Your referral networks and strategic partners can also help to evaluate and provide market feedback on new products and services.

Our observation is that at the expense of delay, it is better to pilot and market test a product and service at the prototype stage to evaluate its sales potential. This strategy can also identify changes that will increase market acceptance and the probability of success.

A Marketstrat business consultant, based in the Sydney region, can help you to formulate a pilot and market testing program which can then be incorporated into a fully integrated Marketing and Business Plan.

A primary goal for businesses is to maximise profitability by matching sales with capacity.

If sales volumes are significantly more than your capacity, it can potentially lead to shortages, late deliveries, extended lead times and poor customer service.

When your business has excess capacity, it can become unprofitable with insufficient sales and margins to cover your overhead costs and loan repayment commitments.

When sales fluctuations are the norm, strategies need to put in place to enable the business to maintain the delicate balance between sales, capacity and profitability. These can include:

• Reducing the lead times between sales orders and supply
• Implementing a streamlined scheduling and administration system
• Managing an efficient inventory system
• Outsourcing direct costs to subcontractors and suppliers
• Establishing a flexible overhead structure which can be reduced in quiet periods

Our observation is that maximum profitability and performance is best achieved when the sales and capacity levels are aligned with effective planning and management of a low-cost and flexible supply and overheads capability.

A Marketstrat business consultant, based in the Sydney region, can help you to analyse, plan and implement strategies to align sales with capacity using a Budgeting, Marketing and Business Plan framework.

Empathising with customers can help you to align your business to the changing needs of your target markets. This will require:

1. 1. Researching and empathising with customers, being aware of their core needs, their options, compromises and levels of satisfaction.
2. 2. Anticipating how you expect these to change, are changing and why.
3. 3. Planning new product and service offerings to align with these emerging changes.
4. 4. Validating and testing your assumptions with customers, staff, referrers and stakeholders.
5. 5. Auditing the capacity and flexibility of your organisation to meet the challenges of change.
6. 6. Strategically comparing the strengths and weaknesses of current and potential competitors.
7. 7. Preparing a strategic and financial analysis using a marketing, business planning and budgeting framework.

Fundamental is having the skills to empathise with customers, understanding their core needs, circumstances, priorities, options, compromises and the reasons why. This takes imagination, consultation and time.

Our observation it is empathising with customers and their core needs and motivations can potentially lead to the development and marketing of innovative products and services that will really make a difference.

A Marketstrat business consultant, based in the Sydney region, can help you to objectively empathise with customers, explore your competitive positioning and analyse your strategy options utilising a Budgeting, Marketing and Business Plan framework.

Achieving marketing objectives requires the planning and implementation of multiple sales and marketing strategies working together in strategic alignment.

Marketing is a complex discipline with many interwoven strategy components. For example, these can include:

• Advertising and promotion campaigns
• Corporate image and reputation positioning
• Product features, options and performance benchmarks
• Packaging combinations and presentation
• Signage, point of sale and merchandising
• Web site and social media presentation, functionality and promotion
• Sales team, account management and representation strategies
• Referral network development
• Pricing, quoting and proposals
• Submissions and tendering
• Customer service, complaint management, training and support
• Deliveries, installations, commissioning and warranty management
• Trading hours, location, availability and accessibility
• Customer research, data systems and analysis

Rather than merely focusing on one single sales and marketing strategy, it can be the constant review and fine-tuning of these many elements which can really make a difference.

Our observation is that the impossible, can become possible if all of the pieces of the marketing puzzle are identified, thought through, planned, integrated and implemented.

A Marketstrat business consultant, based in the Sydney region, can help you and your team to objectively identify and plan the marketing strategies that are needed to achieve significant change utilising a Marketing, Business Plan and Budgeting framework.

If more than one person will own your business, we strongly recommend that you prepare a Partnership or Shareholders Agreement with your solicitor before you start.

This will have many benefits, providing you with a legal framework to make important decisions at a time when everyone is feeling positive and optimistic towards the new venture. These include:

• Establishing a legal structure of the business.
• Defining who are the owners, what are their rights and how this is shared between them.
• Referencing the Business Plan and Budget which details the agreed direction of the business, the strategies and financial projections.
• Determining how the set-up and running of the business will be financed with loans and owner’s funds. This will include who will be providing security.
• Clarifying the roles and responsibilities of all the owners.
• Specifying how the owners will be remunerated from a salary and profit sharing perspective.
• Agreeing on the entitlements of the owners in terms of vehicles, smart phones and computers and the reimbursement of business-related expenses.
• Predetermining how difficult decisions will be made and disagreements will be resolved.
• Specifying the management reporting and meeting protocols.
• Agreeing on buy-sell arrangements and how owners can join and leave the business, including what happens if an owner dies. This is important as these unfortunate events involve spouses, families and people who are not necessarily involved in the business.

Our observation is that the preparation of Partnership and Shareholders Agreements is too frequently “left to later” risking conflict, uncertainty and potential disagreements if the relationships become acrimonious.

A Marketstrat business consultant, based in the Sydney region, can help you to prepare a Business Plan and Budgeting framework that will help with the process of preparing Partnership and Shareholders Agreements.

Making a sale requires much thought and planning as you progressively navigate a potential customer along a sales path from need awareness through to making a purchase.

As with ascending to the peak of a high mountain where first we must climb the foothills, achieving a sale requires us to take a path with many steps.

When going into a meeting, it is always best to clearly know at the outset, the outcomes we want to achieve and the steps we will need to take to get there. If you go into a meeting without a clear goal or strategy (hoping for the best), we will more than likely come out with a result being sought by someone else.

Selling operates in a similar way. Most importantly, if one step does not lead to the next, the potential sale is lost. A salesperson’s challenge is to:

1. Understand the series of steps involved in the selling process
2. Know where on this path the potential customer is currently positioned
3. Anticipate what will be required to help the customer move to the next step
4. Having a planned and well-thought-out strategy to take them there

Therefore, to make a sale we need to have answers and strategies to support potential customers through the following stages:

1. Need Awareness
   • Do customers have a need for our product or service?
   • Are they aware they have a need?
   • Is this a need they feel they need to satisfy?
2. Exploring Options
   • Do they know what their options are to satisfy their need?
   • Are they aware of our products and services?
   • Are they aware of the benefits of our products and services?
   • Are they interested in researching our products and services?
3. Decision making
   • Are they proactively comparing their purchase options?
   • How will they make their decision to purchase?
   • Are they ready to make a decision, if not why?
   • Are they focussing on the reasons why they should not purchase?
   • Are they seeking validation and reassurance?
   • Is the approval of other decision makers required?
   • How will they implement their decision?
   • What is their post-decision experience?

Our observation is that selling involves a complex series of steps which progressively bring potential customers closer and closer to making a purchase. Successful selling is being proactive in guiding and supporting this process at every step.

A Marketstrat business consultant, based in the Sydney region, can help your sales and marketing team to navigate the sales path, creating interest, generating enquiries and converting these into sales.

“Quality service” can mean many things to different people. In order to market “quality service”, we need to research how customers value and experience quality with our products and services.

“Quality service” can have many interrelated components. When these are examined we have a framework to audit each quality component, make improvements as needed and promote them as an appealing package of quality benefits that are relevant and meaningful to customers.

Examples of the multiple elements of quality service are:

• Providing a quick, convenient and professional response to customer enquiries
• Listening and empathising with customer needs and priorities
• Competently addressing their needs with practical and affordable options
• Providing competent and helpful information, advice and support
• Clearly explaining how our products and services can be purchased and used
• Making it easy and convenient for customers to purchase our products and services
• Ensuring that the products and services are exactly the ones being purchased
• Delivering our products and services when and where they are needed
• Assisting with installations, commissioning and customer training
• Exceeding customer expectations with thoughtful attention to detail
• Promptly and professionally resolving customer complaints
• Following-up with a genuine interest in customer satisfaction feedback

The best method for dissecting the components of “quality service” is to examine the total customer experience from when they make their initial contact or enquiry through to them purchasing and using our products and services.

Our observation is that the marketing of “quality service” is more effective when the components of “quality service” are explained and promoted to customers.

A Marketstrat business consultant, based in the Sydney region, can help your sales and marketing team to market “quality service” by reviewing the quality components and planning marketing strategies to promote them to your target markets.