LimeMinds - A Fresh Approach to Business » Account Management http://www.limeminds.com A Fresh Approach to Small Business Thu, 05 Jan 2012 16:41:17 +0000 en hourly 1 http://wordpress.org/?v= Business Advice: Working with the big retailers http://www.limeminds.com/business-advice-working-with-the-big-retailers/ http://www.limeminds.com/business-advice-working-with-the-big-retailers/#comments Mon, 06 Sep 2010 10:05:18 +0000 admin http://www.limeminds.com/?p=824 Often for those who run businesses selling consumer goods the big retailers are seen as some kind of holy grail. True they can deliver great economies of scale to your production, they can get your product out the widest audience and yes they can help you break out into being a mainstream product. But is [...]]]> Often for those who run businesses selling consumer goods the big retailers are seen as some kind of holy grail. True they can deliver great economies of scale to your production, they can get your product out the widest audience and yes they can help you break out into being a mainstream product. But is trading with these big national retailers everything it’s cracked up to be and are the challenges and stresses they exert on your business worth the reward?

Working with large retailers such as Asda, Tesco and Sainsbury’s can help get your product out to the widest market possible, lets face it who doesn’t shop in a supermarket at least once a month? These operators can help you turn a fledgling niche business into a big operator overnight. You can go to zero to hero in days! So what’s the issue, sounds great? Big retailers, big orders, your product in the reach of thousands of shoppers what could go wrong? Well a number of things in truth and some you will have no control over at all.

Firstly getting into the big retailers is no mean feat, getting time with the right person can be challenging enough for big manufacturers let alone some small independent producer no one has every heard of.

Lets imagine you got that meeting and its going well, they love your product, but they have a few questions. They have margin targets and your product won’t deliver in its current format, can you reduce the cost or re-engineer the format? Competition is tough on their shelves have you got the marketing budget to make it work? If it does go into high distribution and demand is high can you meet production requirements and will you make them the number 1 priority over your other small but long standing customers?

Of course these were all questions you’d thought they’d ask and deflected them beautifully, now you need to work with their product development and merchandising teams to make sure the product is delivered and packaged in a satisfactory way. The product is tested for scanning at till and despite a few minor hiccups long the way it all gets through.

Supermarkets can have your products in the reach of thousands

So a month or two down the line and your product is set-up, in depot, on-shelf in store and ready to be scanned. You’ve agreed a launch promotion to help get the word out (of course there is a ticket fee for running it and you will be expected to fund the promotion to keep it margin maintained). Your first product is sold and over the coming weeks and months so are many more. You couldn’t be happier and everything in the garden is rosy, before you know it other retailers are taking your product and you are well on the way to being a big deal in consumer goods.

So where is the real problem? Well often further down the line you will need to invest in your infrastructure to cope with the increased demand, you’ll need more people to support and manage the growth.  All good things for any healthy growing business. The challenge comes when you need to increase your prices to support this investment and when the retailers demand support on margin because they’ve decided to move the retail price down.

Further pressure comes when they expect you to promote your product to ever increasingly deep mechanics such as Half Price or BOGOFs. You can quickly escalate into spending huge sums of money in driving your product through the retailers, supporting their margins and watching yours erode.

Your brand equity can be destroyed instantly if they choose to crash the retail price or promote to excessive levels. Of course you can stand firm and refuse to promote to these levels or force the price increase through. The result at best a reluctance to work with you and your brands, a decrease in the levels of distribution. At worst de-list!

We would never say working with the big grocery retailers was a bad thing in fact it can often be the best thing for a product or brand. All we would say is manage your expectations and be wary of potential issues and pitfalls of trading with these big players.

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]]> http://www.limeminds.com/business-advice-working-with-the-big-retailers/feed/ 0 Managing Your Key Customers http://www.limeminds.com/managing-your-key-customers/ http://www.limeminds.com/managing-your-key-customers/#comments Mon, 31 Aug 2009 19:59:44 +0000 admin http://www.limeminds.com/?p=752 Managing your large and key customers is an important yet often tricky act for many businesses, especially smaller ones.

By their very nature your key customers can place you as a supplier (of product or service) under much greater pressure than your smaller customers. Large customers deliver the much needed revenue and often prestige for [...]]]> Managing your large and key customers is an important yet often tricky act for many businesses, especially smaller ones.

By their very nature your key customers can place you as a supplier (of product or service) under much greater pressure than your smaller customers. Large customers deliver the much needed revenue and often prestige for your business or brand but they are also able to apply pressures to your supply chain, margin and time.

How you manage these customers can be vital to the future success of your business, manage them poorly and they can ultimately be the downfall of your business.

Know their business - Allan Leighton (former CEO of Asda) once said “If you don’t know my business, you don’t have a business!”. Find out everything you can about their operation, understand what pressures they may be coming under and build your service around that knowledge.

Relationships are key – People by from people, it might be a cliche but its true. If you need a customer to get behind a new product or to implement a change it all happen much faster and smoother if you have a good relationship with your buyer and the team around them.

Have a plan – Take time to write a 2/3 year plan for your key customers and option build for possible future scenarios. Be clear on your strategy to develop these accounts and understand where you want them to be in the future. Look to have a ‘What if?’ solution ie: What if they go bust? What is the impact and alternative for my business?

Move from being Transactional to Collaborative - If you spend all your time with your key customers talking about investment, prices, deals, service levels, margins you have a transactional relationship. Work on moving the relationship to a more collaborative one by bringing more to the table than just price. Look to discuss joint business plans, offer strategic insights and thought leadership, demonstrate your understanding of their business and trading environment. Make yourself a strategic partner and position your product/service as far away from being a commodity as possible.

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]]> http://www.limeminds.com/managing-your-key-customers/feed/ 0 Quick Financial Measures to Check The Health Of Your Customers http://www.limeminds.com/quick-financial-measures-to-check-the-health-of-your-customers/ http://www.limeminds.com/quick-financial-measures-to-check-the-health-of-your-customers/#comments Mon, 10 Aug 2009 17:59:43 +0000 admin http://www.limeminds.com/?p=755 We’ve listed a few of the quick financial measures you can run on your customers (or suppliers) to check their business health. We’re sure you’d agree that in ths current economic climate any insight into the long term viability of your customers and suppliers is fairly useful.

If the company you are looking at is [...]]]> We’ve listed a few of the quick financial measures you can run on your customers (or suppliers) to check their business health. We’re sure you’d agree that in ths current economic climate any insight into the long term viability of your customers and suppliers is fairly useful.

If the company you are looking at is listed on the stock exchange you should be able to access these measures through a number of financial websites online without needing to employ any maths, (our favourite is www.advfn.co.uk) but don’t worry if the company isn’t listed as you can work these measures out with just the company’s annual reports logged at Companies House (for those based in the UK) and a calculator.

Current Ratio

Current Assets (CA) Divided by Current Liabilities (CL)

Current assets divided by current liabilities i.e. the ability (in theory) of a company to meet its short term debt on demand, for instance, if it went into receivership.

Strictly speaking this ratio should be greater or equal to 1, although in practice a much lower value is widely accepted (one of the effects of Just-In-Time).

 

Quick Ratio (acid test)

Current Assets (CA) – Stocks Divided by Current Liabilities

Current assets less stocks divided by current liabilities.

The rationale here is that stocks cannot be quickly converted into cash in order to meet short term debt on demand, and hence they are deducted from current assets.

In theory, a company’s quick ratio should be greater or equal to 1, or it is insolvent. However, a much lower figure is generally accepted today, provided that the company is considered to be financially stable.

Return on Capital Employed (ROCE) %

Net Profit before taxation x 100

Fixed Assets (FA) + Current Assets (CA) – Current Liabilities

Net profit (profit before taxation) as a percentage of the capital tied up in the business i.e. the company’s profitability.

The higher the ration the more profitable the company. Relate this to net margin and capital turnover.

The percentage return must be compared with alternative investment opportunities, such as returns offered on bank accounts.

If investment in the bank can yield a guaranteed 7 per cent plus (depending on interest rates at the time), a company should show a return of around 20 per cent in order to justify using those funds at a higher level of risk.

Debtor Period (days)

365 X Debtors Divided by Turnover

The average number of days credit given to customers i.e. how long it takes the company to get its money in.

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