Securing your receivables....

Are these steps worth the effort?

Let's assume that you have terms of “30 days net” with most of your customers but that they generally drag out payment to you so that on average they take 60 days from invoice date to pay you (i.e., 30 days overdue). If you can convince just 25% of your customers to pay on time and 25% to pay after 45 days, you will reduce your total receivables by 18.75%. This is usually a very achievable target. Apply that percentage to your receivables balance and that is the amount of additional cash that you will have in your business. If your receivables are usually about $1m, you would generate $187,500 in additional cash.

So, what are some of the management issues that need to be addressed to achieve this? Not all approaches are appropriate for every business or every customer but all should be considered:

1. Do you have a credit policy for the granting of credit to customers? If not, implement one and make sure that your customers are aware of it. Many customers will adhere to the policy once they are aware of it even if some will delay a few days beyond the limit. This is almost always better than allowing the customer to set the terms. Ensure that all new customers are made aware of the policy and expressly agree to abide by it or negotiate an “exception” as a special for that customer. If most of your customers take 60 days and you ask for 30 days and settle for 45 days, you are way ahead.
2. Both existing and new customers should be screened and credit limits set. Do not get into the trap of extending credit beyond a set limit to a customer, without negotiating terms for them paying you and staying within that limit or a newly revised limit. Nothing is worse (other than a default on payment) than having to cut off a customer without some warning if they do not manage to pay according to an agreed schedule. Consider your reaction if a supplier were to cut you off without warning. Also, offering extended terms shows a willingness to work out a payment schedule with your customer and makes them much more likely to stick to the terms.
3. Ask slow paying customers what you can do to facilitate faster payment. They should at least be aware that you are watching them and are prepared to work with them. What a great opportunity to show your good faith to a slow paying customer. There are so many situations, especially with big companies (where bureaucracy often prevails), where a simple win-win can be achieved by sending the invoice to the appropriate staff member and/or a copy to a second person, etc.
4. Remind the person dealing with your payments of your credit terms. Often the accounts payable clerk is not aware of your terms and a gentle reminder can be helpful.
5. Pester them (very politely) to pay more promptly. Your accounts receivable should have a relationship with every customer’s accounts payable and should phone them regularly, especially if they are not paying strictly within the terms. This should almost always be the nicest, most polite and friendly “squeaky wheel” in town. Developing this favourable relationship will often facilitate your account being settled expeditiously.
6. Consider cutting lagging customers off from further business (until they are within your credit terms). Doing this once often has a magical affect on their willingness to stick (closer) to the terms in the future. Of course, it is also a very powerful risk management tool. If they cannot pay, at least you have limited your exposure. It goes without saying that this must be used with a lot of discretion, especially if your customer can easily obtain the supplies elsewhere.
7. Consider whether you wish to continue doing business with them at all. This is especially effective if you have a shortage of supply in your industry. If it is known that the product is not readily available your customer should understand that prompt payment is required.
8. Consider whether you are dealing with the correct person to facilitate payment. In many companies accounts payable determines the amount to pay and to whom, based on general directions from the Controller. Create an exception by calling a senior person in your customer’s organization, someone you know, or can develop a relationship with, to ask that you be paid promptly.
9. Consider increasing your price to the slow-paying customer. Multiple price lists exist in many industries and there is often no reason why you cannot move a customer to a slightly higher pricing formula.
10. Consider offering a higher discount for prompt payment. Many businesses offer terms for prompt payment such as “2% - 10, net 30.” Some customers will stay within these terms and pay promptly to benefit from the discount. For those that do not take advantage of the discount, consider a phone call to offer them an even better discount. Tailor this to suit the occasion. Call a customer (who normally pays after 45 days), after 10 days have passed and explain that although they have missed the 2% discount, you are prepared to extend this, on a one-time basis, and give 2% for paying within the 30 days. A particularly effective method if you are in a cash crunch is to call a customer who owes a large balance and offer a discount of 5% if they pay within two days. This should be set at a level that it is so tempting that they will almost certainly take it. Of course one has to take into account the reputational impact of such a move.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Tips to negotiate the best trade discounts.....

Someone once said that everything in life is negotiable and this is certainly true when it comes to getting a trade discount. I'm always happy to discuss and negotiate deals with our customers, because not only do we usually reach a win:win outcome, but I also get great insight into what our customers really want!

There’s a subtle art to negotiating a discount and I've put together a few pointers for you to point you in the right direction.

• Know your market. Do some research, look at competitors’ prices and ask for attainable realistic discounts. Know why you should have the discount and be prepared to put your point across.
• Understand what motivates the seller and give out the right selling signals. Mentioning repeat business is always a good way to negotiate a more favourable price, you’re more likely to get a discount when you’re ordering in bulk.
• Always be polite and courteous when you are negotiating. Taking a hard line may get you the result that you want, but any future relationship is going to be soured by your attitude.
• Make sure that you have some prices fixed in your mind before you start negotiating. Have an acceptable price and a walk away price. Be prepared to walk out of the shop with nothing if your expectations were not met.
• Always make it appear that you have lots of alternative options. Telling the salesperson that they are the “only stockists”, or that you’re really desperate does not put you in a strong position for negotiating that discount.
• Don't only focus on price - you've got a basket of items to negotiate on. If you can’t negotiate on price, you may be able to negotiate on the level of service. I’ve recently negotiated free delivery and installation of some new equipment even though I was unable to get the price down.
• It’s all about how you ask. Phrases like “Is this the best price you can do?” and “It’s a bit more than I wanted to spend really” are good ways of opening negotiations for those who aren’t used to asking for discounts. And you'll get better at it the more you practice - so the more you do it the better long term effects it will have on your future negotiations.
• Don't negotiate for a win:lose outcome. Your negotiation might be successful in the short term but a business that goes out of business because they fail to negotiate above their bottom line will only give you grief in the future.

At the end of the day, just keep in mind that a sales person will only ever give you a discount that they are happy with, so you have nothing to lose and everything to gain by asking to discuss the price. A salesperson will generally rather take a small hit in their commission rather than lose the sale altogether.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

7 tips to reduce warehouse costs…..

Cutting your warehouse labor costs can improve the organization’s overall efficiency and increase earnings. The key is to devise ways that produce an impressive return on investment instead of simply reducing staff. Warehouses generally claim a large amount of real estate on the premises. Therefore, reducing labor costs could make a big difference in overall expenses.

Step 1

Train your current staff how to work smarter using forklifts, devices for communicating across warehouse space, order-picking processes and cost control related to damages and breakage. Provide opportunities for employees to exchange tips for more efficient warehouse processes, and offer cross-functional training for warehouse, purchasing and shipping department employees so they understand their interdepartmental responsibilities and work flow.

Step 2

Award employees incentives for completing training, such as recognition, certification and, if feasible, cash bonuses. Also, provide cash bonuses for warehouse employees who work diligently to prevent on-the-job injuries. This ensures that a larger percentage of your workforce participates in efficiency-enhancing activities.

Step 3

Review your warehouse scheduling and employee hours. Unless your company’s shipping and receiving occurs on a 24/7 schedule, you may be able to create compressed schedules that accommodate your business needs as well as warehouse employees’ needs to achieve work-life balance. Reducing the number of shifts you run will significantly cut labor costs. Maximizing your employees’ work times can improve job satisfaction and, consequently, reduce turnover. Reducing turnover will save a considerable amount on labor costs — the cost to recruit, hire and train new employees can eat up a chunk of your warehouse budget.

Step 4

Select experienced employees to train new warehouse employees. Employees who actually perform warehouse duties are better able to provide on-the-job training for workers who may not have worked in a warehouse environment. For example, use current staff to train on inventory and supply chain management, managing inventory, industry practices for inventory audit, packaging, shipping and receiving.

Step 5

Install technology solutions for supply chain management to improve work flow and employee efficiency. This might result in lower labor costs through reducing staff; however, the training that warehouse employees receive may help them advance in other areas of the company. Supply chain management technology can be customized to meet your company’s specifications, as can warehouse management system solutions.

Step 6

Implement warehouse safety measures. Mitigating company risk associated with warehouse injuries automatically cuts your labor costs because you aren’t paying for workers' compensation expenses and potentially reassigning workers for areas with which they might not be familiar. According to the U.S. Bureau of Labor Statistics, in 2010, for every 100 warehouse employees, there were 4.1 work-related injuries that incurred additional labor costs such as absences or moving employees to other departments.

Step 7

Obtain employee input on warehouse and inventory best practices they believe will make their tasks and duties easier. Asking your employees for their opinions conveys the message that you value their opinion and, in turn, makes them happier employees.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Management by objective....




Definition

Management by objectives is a dynamic system which seeks to integrate the company's need to clarify and achieve its profit and growth goals with the manager's need to contribute and develop himself. It is a demanding and rewarding style of managing a business.

Explanation

Since the best managers have always practised management by objectives, the cynic's view that it is merely old wine in new bottles is perhaps valid. However, it is timely and useful to restate basic principles and to demonstrate that there is a practical approach which will help all managers to improve their performance. Companies are meeting increased pressures of competition and rising costs and management’s task is becoming more complex with accelerating changes in markets, technology, and social environment. Yet, many companies are content to follow tradition based on past success. The explosive growth in knowledge had led to more specialization, with the result that fewer general managers and entrepreneurial types are being produced. Moreover, the time span and range of objectives set by companies is often dangerously restricted. Management by objectives must create a climate of opinion in which these and other problems are recognized as well as providing the framework of techniques for solving them.

Illustration

When a worthwhile system of management by objectives (MBO) is operating in a company there is a continuous process of:

1. Reviewing critically, and restating, the company’s strategic and tactical plans.
2. Clarifying with each manager the key results and performance standards he must achieve, in line with unit and company objectives, and gaining his contribution and commitment to these.
3. Agreeing with each manager a job improvement plan, which makes a measurable and realistic contribution to the unit and company’s plans for better performance.
4. Providing conditions in which it is possible to achieve the key results and improvement plans, notably:
   1. An organization structure which gives a manager maximum freedom and flexibility in operation.
   2. Management control information in a form, and at a frequency, which makes for more effective self-control and better and quicker decisions.
5. Using systematic performance review to measure and discuss progress towards results, and potential review to identify men with potential for advancement.
6. Developing management training plans to help each manager to overcome his weaknesses, to build on his strengths, and to accept a responsibility for self-development.
7. Strengthening a manager's motivation by effective selection, salary, and succession plans.

These techniques are interdependent and the dynamic nature of the system can be shown as in the diagram above. It follows that the development of managers, which is a matter of vital importance to every company, only makes sense if it is integrated with the purpose of the business. Looked at in this way, management development is a valuable by-product of running a business efficiently.

Chris Wilkinson.

Certified Business Behaviour & Attitudes Analyst.

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Statements that Influence the High ‘S’ Supportive (non aggressive) team buyer type….

*   “I feel you are open to a number of possibilities, and I want to recommend this plan of action.”

*   “There is so much potential success here in what you can do. It is important to keep abreast of what others

are doing.”

*   “Make some calls to others who have anticipated a similar change. I have a comprehensive list that will assist you in this activity.”

*   “While you will not change just for the sake of changing, you can readily see how this will add to your already effective system.”

*   “You will have an opportunity to see the way in which I work with the plan. That will provide you with an opportunity to get some additional clarification.”

*   “By accepting this system, you are really buying insurance for yourself and your family. There is a great deal of security involved.”

*   “A number of individuals and organizations have already found the system to be very reliable. Here is a list of those groups.”

• “The factual information and the conclusions will be of real interest to you. Check it over to see how it works.”

Presentation Tips for your presentation.

1. Take it slow and easy; if you go too fast, you’ll lose the sale.
2. Provide plenty of proof and statistics.
3. Earn their trust and friendship by visiting about family and hobbies.
4. May require additional visits for reassurances before the sale is made.
5. Emphasize your proven products.
6. Earn their trust with facts and figures.
7. Take it slow and easy.
8. Make repeat visits and be sure all questions are answered.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Statements that Influence the High D-Dominant buyer….

• “No doubt you’ll want to try it out. You’re the type of person who will make it work.”
• “While it is difficult to accept just anything, you’ll be able to see both the advantages and disadvantages.”
• “Other people can carry on with the program once you have explained it. You’re the person who will get the credit. After all, you are the one making the decision.”

• “This is totally new—really, there is nothing that will compare to this idea.”
• “The nice thing about this plan is that you don’t necessarily have to do it all yourself.”
• “In a few minutes you can see the way it will serve your needs.”
• “This program sells itself. In just a few words I can demonstrate the practical advantages.”
• “This will provide an opportunity to get credit for what you do. It is something you can call your own.”

Presentation Tips.....

1. Don’t waste their time. They won’t want lots of facts and figures; just hit the high points and get to the bottom line.
2. You and the product must appear credible.
3. Can be difficult to switch from current, trusted suppliers. But, once switched will remain highly loyal as long as you provide service.
4. Will not want to see many testimonials, research, data, etc. May delegate this research to subordinates.
5. Will be impressed with an efficient, no-nonsense, business-like manner.
6. Will be interested in new products.
7. Be concise and business-like. Don’t waste time with idle talk. Get to the point quickly, solve their problems fast and make the sale.

 Working with you.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Selling successfully to the friendly, outgoing buyer…. 

(AKA a ‘high I buyer).

 (Part 2 of 4).

Statements that Influence the High I buyer….

*   “Looking at the comparisons I’ve made will help you decide which approach is better.”

*   “You will want to delegate some of these tasks to others since your time is valuable.”

*   “Many people recognize the need. You would be the first person to recognize that. However, one individual has to lead the way, and I’m sure they can rely on your judgment.”

*   “By combining this idea with what you are presently doing, you have a combination for future profits, and you will be building on your present success.”

*   “You’ll want to try something that provides you an opportunity to expand your present operation.”

*   “This is an overall summary, which will be helpful for you to see the feasibility of the program.”

*   “It’s the kind of program that utilizes your skills in working with an innovative idea.”

 Presentation Tips:

*   Spare the details; they will not want to hear them.

*   The buyer will often buy easily from you with only a minimum presentation. But beware! The competition can steal the buyer away from you just as easily. So give plenty of follow-up service.

*   The buyer will be interested in new and innovative products. They will try almost anything under the right circumstances.

*   The buyer will want to talk a lot, socialize, etc. Buy him lunch or a cup of coffee and you’ll have him sold.

*   Eliminate lots of details. Just hit the high points. Show him new products, socialize and provide plenty of follow-up.

Working with you.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

First of a series of 4

Statements that Influence the High C (as in Cautious) buyer:

Aka: the fearful, cautious, careful, analytical buyer who does not want to make a purchasing ‘error’.

• “A program such as this should have standards which permit a careful evaluation of the quality. It will stand upto your high standards of operation.”
• “With something this important, let’s set up several sessions where we can clarify all the possible alternatives.”
• “There’s always the excitement of putting something like this to work. You are going to be around here a

long time, but I’ll be surprised if this system is not here when you’re retired and enjoying your leisure.”

• “Other people are doing it, and it works for them. You’ll probably end up doing it better than they are.”
• “You’re in a position to examine the facts, interpret them and draw the conclusions.”
• “I am sure you’ll take a very close look at the findings.”
• “Remember, we are discussing a planned change. You will be able to work with it over a period of time to see

how the system works.”

• “There has been a great amount of input into this idea, which ensures a quality program.”
• “You would be interested in knowing how thoroughly we have researched the entire operation. It’s been

written up in the literature, and we can carefully go over this together.”

 Tips for your Sales Presentation.

1. Client needs lots of proof, background information and proven results before making a purchase.

Needs to take time, absorb details and digest facts before going to the next step.

2. Highly suspicious of new and unproven products. Use testimonials or plenty of research information to back up your presentation.
3. Don’t rush, but don’t waste time with small talk. Get right to the point with plenty of facts and figures. Be sure that all the customer’s questions are answered.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Have you ever hired someone (sales person) who didn’t meet your expectations?

Are you short on resources, money and time to spend identifying qualified candidates?

Would it positively affect your bottom line your recruitment process consistently delivered qualified candidates that have been strategically matched to the job?

If you answered “yes” to these questions, you will benefit from a job matching approach that benchmarks a specific job, not the person, in an interactive process. A recent case study revealed that by using Business Pilots patented job benchmarking process, two different sales teams were positively transformed:

Company A

Company A’s sales manager was having a major problem with his sales force -- 74% turnover. That high rate of turnover came at a great cost to the company’s bottom line. In fact, it’s estimated that it can cost upwards of twice an employee’s salary to find and train a replacement, not to mention the damage to morale in remaining employees. To address Company A’s sales force issue, the JOB itself was benchmarked using Business Pilot’s ‘Work Environment’, job-related process. The sales manager was then able to compare all current and new salespeople against the benchmark. Each and every salesperson was put on a personalized development and management plan based on the job benchmark. The results? Company A’s sales team experienced 0% turnover for the next 24 months.

Company B

At Company B, a new sales manager inherited a sales team that ranked No. 22 out of 22, or dead last. The new manager immediately benchmarked the sales position using Business pilot’s Work Environment process process, and he compared his current salespeople to that benchmark. He quickly discovered that a massive 75% of his sales force did not match the sales position benchmark. By replacing that 75%

with superior salespeople who did, in fact, match the benchmark, his team skyrocketed to No. 3 out of the 22 sales teams.

For both Company A and Company B, job benchmarking revolutionized their sales teams, increasing the profitability of each company. When you have the right people in the right jobs, you will create more dynamic teams with higher engagement, retention and development.

To learn how JOB benchmarking can revolutionize your hiring practices, contact Chris Wilkinson, Business Pilot at  (905) 275-2907.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Are your salespeople making the same style of presentation to every buyer?

 People buy from people they like---BUT what do they like???

The following statements are True:

·         People tend to buy from sales people who have behavioural styles similar to their own.

·         Sales people tend to sell more to people with behavioural styles similar to their own.

·         Sales people who are aware of their behavioural style and learn to “blend’ with their customer’s style are able to increase their sales.

                

How many sales do your salesmen lose because of not ‘behaviourally” treating your customers in the buying style that the customer prefers?

PEOPLE BUY FROM PEOPLE THEY LIKE!

(ie: Birds of a feather, flock together)

Some buyers:

·         Like you to be direct                *   Like personal talk.

·         Like to have fun                       *   Like time to think.

·         Like new products.                  *   Like to negotiate.

·         Like proven products.              *   Like showy products.

·         Like a lot of data.                     *   Like traditional products.

·         Like to be touched.

                                           …and some DON’T!

                        

              There are 4  behavioural languages, ONLY 4, and every human being on Earth fits into one of them………..

·         Dominant.       )

·         Influencer.       ) 

·         Supporter.       )    Known as D-I-S-C.

·         Compliant.      )

                    If your salespeople do not understand these 4 styles of buying behaviour and how to adjust their selling style and sales closing strategy, ie. the DISC language, you are saying goodbye to valuable sales dollars. The single, best way for the company chief sales executive to increase sales dollars and customer satisfaction is to train the sales team in the DISC language and to apply the most effective techniques to close the sale successfully.

            Your salesman must know:

1.      His own behavioural style.

2.      Know his customer’s buying behavioural style.

3.      How to blend his selling style, with that of his customers, to eliminate friction in the sales process.

4.      To apply the type of sales close technique most successful for a specific buying style.

            A 3 hour seminar presentation to your sales force/customer service people at your next sales meeting.

            Interactive: each participant is supplied with a 20 page assessment of their personal selling style , a BENCHMARK ---- (10 minutes only to complete on the internet, 24/7, in advance of the meeting) plus 12 different closing strategies applicable to different buying styles.

          

           IDEA:  Invite your customer’s sales people to attend. An excellent opportunity to “bond” and show them that you care.

           Upon request, I will send you a 13 slide sampler of the presentation, plus an offer for a complimentary/no obligation selling style assessment, so that you can fully appreciate the powerful report and seminar content.

           I look forward to hearing from you with any comments/ questions that you may have.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net