The podcast that helps you find Cash in your Business: On this episode you can look forward to an explanation of the terms Profit and Loss. The featured segment ‘7 areas where companies bleed Cash’, and at what cost a blood transfusion comes. The Cash in quick tip. An introduction to help you understand the business’s Working Capital Cycle, and why improving it benefits the bottom line, and a quick look at loans. And a special offer.
Thursday, 24 February 2011
Tuesday, 15 February 2011
How to beat the competition. Episode 3 Finding Cash in Your Business
The podcast that helps you find Cash in your Business: On this episode you can look forward to an explanation of the terms Liquidity. The featured story to get you thinking about beating the competition. The Cash in quick tip. An introduction to competitive analysis, the Current Ratio and the Acid test. And a special offer.
Wednesday, 9 February 2011
Generate more Cash from existing turnover. Episode 2 of the Finding Cash in your Business Podcast Series
The podcast that helps you find Cash in your Business: On this episode you can look forward to an explanation of the terms Working Capital, Free cash flow and EBITDA. The featured story to get you thinking about generating more cash from existing turnover. The Cash in quick tip. An introduction to time lag and the value of Cash flow forecasting. And our special offer.
Monday, 7 February 2011
Having too many customers can break you
What many businesses don't get, is that the customer acquisition and maintenance cost are normally far greater, than the money the customer will spend with you on their first sale.
On average a business need to bring each customer back at least 5 times before they will begin to generate a profit and become good quality Cash customers.
One business I looked at had just over 700 customers, but was struggling to sell into their customer base.
The company had made the fatal mistake of not understanding the cost of customer acquisition and maintenance. The expectation was that all customers are equal and so they were shared out equally amongst the sales staff.
The average business spends 6 times more trying to win a new customer, than it does generating new business from an existing customer.
In recognition of this fact the solution required a combination of reducing the size of the sales team and providing a more appropriate level of account management.
The company now focuses on supporting the top 20 accounts with sales executives. The other 680+ accounts are managed by a combination of a telesales team and the bailiffs.
The business was now running much more efficiently, it has seen an on-going improvement to turnover, and is in a much better place to manage the growth of the sales team going forward.
On average a business need to bring each customer back at least 5 times before they will begin to generate a profit and become good quality Cash customers.
One business I looked at had just over 700 customers, but was struggling to sell into their customer base.
- Initially I asked for a historical list of how much each customer had spent with the company.
- My next question was how many customers regularly do business with the company. Of the 700 only 70 regularly did business with the company.
- Now comes the crucial question ‘of the 70 how many pay their bills on time or at all?’ now we are down to 30.
- I then asked for credit ratings for the 30 left and that brought the number of good Cash customers down to 20.
The company had made the fatal mistake of not understanding the cost of customer acquisition and maintenance. The expectation was that all customers are equal and so they were shared out equally amongst the sales staff.
The average business spends 6 times more trying to win a new customer, than it does generating new business from an existing customer.
In recognition of this fact the solution required a combination of reducing the size of the sales team and providing a more appropriate level of account management.
The company now focuses on supporting the top 20 accounts with sales executives. The other 680+ accounts are managed by a combination of a telesales team and the bailiffs.
- A typical fully loaded Sales Executive cost to the business was £100,000 and there were 30 in the team including managers. Each sales executive handled over 20 customers. The business was spending around £3m supporting customers who had no intention of buying. In fact only 1 out of every 35 customers was worth supporting.
- Contrary to popular opinion creating a smaller Sales team increased motivation, productivity, salary and sales. The new smaller team had a reduced management overhead and had improved the profit from existing turnover by around 7%.
- The Sales executives had more time to spend with each of their customers that meant they delivered a better quality of service and this in turn encouraged the customer to place more orders.
- It was true that the business had redeployed staff but by doing so it focused on creating a better staff moral and secured the jobs of all that remained.
The business was now running much more efficiently, it has seen an on-going improvement to turnover, and is in a much better place to manage the growth of the sales team going forward.
Wednesday, 9 June 2010
Why demographics matter
The day of 7 Billion is expected to arrive in July 2012. In 1804 the world’s population was 1 Billion to reach 2 Billion it took 123 years, right now it takes about 12 years to add 1 Billion people to the planet. The good news for Internet shopkeepers is that Thomas Malthus prediction in 1798 that the world would run out of food in the 19th Century has not come true and there could be a lot more customers arriving in the shop shortly.
So how can demographics affect the way I do business? Developed countries have stable population and in the case of Europe a decline in population is expected soon. The world’s population growth will be concentrated in Africa, Asia and Latin America. Western companies need to start to understand that young people and new customers will come from these emerging markets.
By 2025, India is expected to have the largest population in the world. Ethiopia with 140m will have the 9th largest population in the world. Infrastructure, communications, medicines etc. all need supporting. So what’s your strategy for reaching the emerging marketplace?
If you don't have one, isn’t it time your company committed to working one out?
So how can demographics affect the way I do business? Developed countries have stable population and in the case of Europe a decline in population is expected soon. The world’s population growth will be concentrated in Africa, Asia and Latin America. Western companies need to start to understand that young people and new customers will come from these emerging markets.
By 2025, India is expected to have the largest population in the world. Ethiopia with 140m will have the 9th largest population in the world. Infrastructure, communications, medicines etc. all need supporting. So what’s your strategy for reaching the emerging marketplace?
If you don't have one, isn’t it time your company committed to working one out?
Thursday, 25 March 2010
Marathon Running and the cash comparison
A friend of mine, Keith Cluderay, is a Marathon winner and Olympic trainer. He told me an interesting story last week. At some point when you are running a Marathon you run out of energy, your body just can't store enough fuel. I kid you not the running terminology is "bonking", some people call it the wall. Your body's fuel store has been completely depleted, and your body needs to break down fat into energy to keep running. Interestingly just before you bonk you are running at your best, I guess you are like a car coasting. As suddenly as a click of the fingers your speed drops and you feel terrible.
Back to our story. Keith was 2 miles off finishing the Marathon and looking like coming in second when the front runner suddenly slowed down and just as Keith became level with him, he said in a low strained voice "go on Keith win the race!" Even after 24 gruelling miles and almost spent that small encouragement played a huge part in providing just the boost he needed ... and Keith won the race.
The analogy with Cash is startling you may have covered most of your route to Market but are you running low on funds? What Cash boost do you need to come over the line?
Back to our story. Keith was 2 miles off finishing the Marathon and looking like coming in second when the front runner suddenly slowed down and just as Keith became level with him, he said in a low strained voice "go on Keith win the race!" Even after 24 gruelling miles and almost spent that small encouragement played a huge part in providing just the boost he needed ... and Keith won the race.
The analogy with Cash is startling you may have covered most of your route to Market but are you running low on funds? What Cash boost do you need to come over the line?
Wednesday, 3 March 2010
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