Introduction
For many years
Meston Reid & Co has been adding value to client businesses.
The success achieved and the response from our existing
clients has created natural expansion of this service and
it is now available to every business which seeks to obtain
a competitive edge. Our strategic planning department offers
a dedicated business coaching and planning service. The
use of bespoke software, together with application of the
knowledge and expertise which we have gained through working
with many successful clients, allows us to help you get
your business on the right track....and keep it there.
We believe our
skills should be used as a complementary resource to your
own skill sets in order to help you run your business more
efficiently, thereby enabling you to make quality decisions.
We trust you will
find this first information sheet useful, and that some
of the tips will help ensure the continued growth of your
business.
Creating
a Long Term Strategy
Do you have a
clear vision of where you would like your business to be
in, say, five years' time?
If so, have plans
been implemented to ensure this vision becomes a reality?
For most small
and medium sized enterprises the answer to each of these
questions is likely to be no. This is because management
is too busy constantly "fighting fires" - dealing with customer
complaints, chasing slow paying customers, worrying about
cash flow, sales levels, etc. In other words you are too
busy working in your business
and not spending sufficient time working on
your business.
Wouldn't it be
great to be able to step back from the business and think
about where you would like to see the business in five or
even ten years' time? Imagine a business which works efficiently
without you having to spend all your waking hours worrying
about the next crisis.
To enable you
to begin working on the business it will be necessary for
you to identify all those areas within the business which
are capable of being systemised. Appropriate systems should
be designed in order to allow delegation and show personnel
how things should be done within your organisation. This
will lead to increased efficiencies within the business,
and ensure effective delegation is in place, so the business
is no longer dependent on you.
You have now created
quality time enabling you to sit back and consider your
vision of the future. When developing your long term strategy
you must have a clear vision of where you see the business
going. You need to ask yourself "What do I want this business
to look and feel like in five years' time?"
Having answered
these questions you then have to ask yourself how you will
achieve these goals.
In other words
you have to say to yourself "This is how/where I want the
business to be within five years, so what plans do I have
to put in place now to achieve this?"
Issues to be considered
will include:
Establish the
overall strengths and weaknesses of your business and
devise an overall strategy to build on the strengths and
eliminate the weaknesses.
Identify your
customers' needs and establish the marketing strategy
best suited to those needs, thereby giving customers what
they want, and not what you think they want.
Ensure this
resource is being utilised effectively, and that everyone
within the business reaches their full potential.
Ensure that
adequate finance is available for reinvestment within
the business.
Your vision
must tell a clear and compelling story about what the
future of your organisation will look like. It must be
full of possibility and stimulate resolve on the part
of others to make it happen.
Return to Top
Benchmarking
Have you ever
wondered how your business' performance compares with that
of your competitors?
Probably, but
what have you done about it other than listen to hearsay
talk?
Every business,
regardless of size, should consider carrying out benchmarking
analysis. It is possible to benchmark non financial as well
as financial areas. Those financial areas which can be benchmarked
include measurement of gross profit percentage, interest
cover, current ratio, return on capital employed.
Benchmarking of
non financial areas is likely to include marketing, customer
care and retention, staff morale.
The effective
use of such techniques will show you how well your business
is performing compared with that of your peers.
The first step
on the road to benchmarking is to identify the key performance
indicators within each area of your business. You must then
ensure that systems are in place which are capable of providing
the information necessary to calculate the key performance
indicators.
Having established
the key performance indicators relevant to your business
you are now in a position to compare these to those of your
competitors, industry averages etc. There are a number of
software packages now available which will give you or your
professional advisor access to such information to enable
you to make comparisons.
Such comparisons
will highlight areas of strength and weakness within your
organisation and will enable you to concentrate your efforts
on areas requiring improvement.
The use of benchmarking
techniques will ensure increased profitability and business
growth.
Benchmarking techniques
should also be used when preparing profit forecasts thus
enabling actual key performance indicators to be compared
with the projections. Any adverse fluctuations can then
be investigated as appropriate.
Just imagine having
a control panel on your desk that will let you see what
is happening in all areas of your business, telling you
at a glance where your business is going and the speed at
which it is travelling. It is just like watching the speedometer
and fuel gauge on the dashboard of your car.
You are now
in control of your business.
Return to Top
Pricing
Strategies
We recently received
management accounts from a client for review. Suffice to
say the results were not great, but the directors, although
concerned with the level of reported profits, were quite
happy with the gross profit percentage shown in the accounts.
Prior to meeting the client we carried out benchmarking
analysis, and although the client's gross profit percentage
seemed reasonable by most business standards, the benchmarking
report showed that other businesses within the same industry
were reporting gross profit percentages of up to two and
a half times that reported by our client.
At a subsequent
meeting detailed discussions on gross profit took place,
and by the end of the meeting the client agreed to review
the company's pricing policy with a view to substantially
increasing gross margins.
Such a review
has been concluded and higher profits are now being reported.
This real life
example demonstrates how crucial pricing strategy is to
profitability. In order to maximise profits it is
necessary to optimise price.
In order to optimise
price, one must establish how much a client or customer
is prepared to pay for a particular service or product.
To achieve this, the business must identify its target market
or ideal customer and establish their
needs.
A company cannot
simply provide what it thinks the customer requires; it
is essential to establish at the outset what the customer
actually wants.
With careful marketing
it will often be possible to set a premium price, as the
customer will be prepared to pay the higher price for the
privilege of buying the product from you.
To conclude, careful
consideration needs to be given to setting a price for each
service or product, and you should not fall into the trap
of basing price on cost plus a fixed mark up.
Return to Top
Conclusion
We will encourage
you to unleash your full potential and that of your employees
by ensuring that everyone is involved in the strategic planning
process, thereby empowering them to accept full responsibility
for their part of the plan.
Call
Us Now
For further information
or to arrange a free consultation contact Bill Griffin on
telephone number:
01224 625554
We can also be contacted by e-mail
at griffinb@mestonreid.com
or by fax on 01224 626089, or visit our website at
www.mestonreid.com
to complete our interactive questionnaire.
Return to Top
