Profit Improvement Exercise

"Many thanks for your help with this, we hit target again in July - it came down to the last 20 minutes of the last day of trading for the month. At 4.45pm on the last day we were short of target by £1200, the whole team were wishing the phone to ring we were that close to not making it. Then at 4.45pm on a Friday afternoon a customer from London walked in and an hour later bought goods which put us over target by £44!!!!!!!!!!!!!!! We were supposed to close at 5pm but every member of the team stayed behind (at their own decision) with their fingers crossed hoping that the customer would buy!

In terms of team building - its the best thing we have ever done - we have a board in the sales office which has the month’s target, this is split into a daily target which is amended every day to reflect the previous days sales, we encourage every member of the team look at the board every day - we have found it becomes a real team effort with everyone willing us to hit target - a massive morale booster!"

Julie Wright – Salon Equipment Centre Limited.
August 2009

CASE STUDY from Julie Wright, Director of Salon Equipment Company Limited:

As a small business owner, there comes a point when you have been working with the same suppliers for years and wonder how you continue to measure the true value of those supplier relationships. None more so than with the relationship and level of service you receive from suppliers who you might consider "don’t make you money". You start to ask yourself, "why am I paying for that service when I could be doing it myself which would then in turn save me money"?

During this period of recession and subsequent global downturn in business it is natural for every business owner like us to review their costs. The key objectives are often how to reduce outgoings, buy goods and stock cheaper, reduce bills, pay invoices later to help cash flow – but during difficult times we forget to evaluate each suppler in terms of their "value for money" or to differentiate between essential and non essential costs.

During our annual review with Hayles we decided to ask the question - what value for money do we get from our Accountants? We were suffering like so many other business owners - sales were down, our industry sector was struggling more and more as unemployment began to rise and disposable income reduced, but we knew there was business to be had. We just had to focus every member of staff on believing that every phone call, every visit to our showroom or every enquiry through our web site was someone who wanted to buy something that we could sell - we just had to make sure we had every member of our team singing from the same hymn sheet. We encouraged the whole team including the warehouse staff and accounts people as well as delivery guys into believing they could help make a difference.

Hayles helped us to make this change by working with us to create a formula that would enable every person in the company to understand our product mix and the effect each supplier had on the overall profitability of our company, which in turn affected sales targets. Everyone started to take an interest and the last two months have been amazing - who would ever have thought that a simple breakdown of our business and daily targets would boost staff morale in such a way - the simple things are often the things we overlook when we are faced with the pressures of keeping a business afloat, I would recommend a review of your business by a third party such as Hayles to any business owner, it has certainly made an impact on ours!

Julie Wright – Salon Equipment Centre Limited.
August 2009

This PROFIT IMPROVEMENT EXERCISE came as a result of a session with the Directors, examining sales mix, mark ups and margins and arriving at break even and profit targets. A formula was created using a simple Excel spread sheet which SEC can use themselves to monitor actual performance real time and compare to budgets.

"This case study is a great example of how a business adviser working closely with a client can add real value to their business relationship, ensuring that the adviser is providing value for money services and that the client is spending their time as an entrepreneur should, working on the business, in a strategic manner!"

Paul Angus – Hayles & Partners Limited.
August 2009

If anyone would like Hayles to carry out a similar exercise and experience similar benefits, please speak to Paul or any of the Partners or Managers at Hayles.

Click here or call 0116 233 8500 to find out if we can help your business.