Stock, Products, Services and People
 
You must be doing well, look at how much stock you've got, look at how many different products you sell; look at how many people you have. You know where this is going don't you.
 
For many years I used to get called in, usually by a bank, or an Insolvency Practitioner, to a company that is turning over, say £10M, and asked to find out what is the problem and how can a disaster be averted. After about ten minutes I would discover that they have enough stock to meet four months demand, are certain that most products are incredibly profitable but overall GP is only 15% and they have about 150 staff. Actually if I had visited every time I had been asked it would be about a dozen times a week I'd find a company like this.
 
I had more work than I could handle but after so many years of telling people just how bad their business, their dream, was going I retreated to the web!
 
Two words – policy and system.
 
Two words that are missing from so many companies, including at least a couple of dozen $1Bn companies, I have been into. It is not difficult.
 
"What is your policy on anything; I would ask"
 
"Some old nonsense" they would say "but we have been a little lax in enforcing it; you see we had this sales director who …"
 
If you do not have a policy on something then you have no methodology, you have no identity; you do not have a company.
 
And if you have any member of staff who does not know the policy you do not have a company as a company is "a group of people combined together to form a business" that's right a group of people, something that about 99% of businesses miss.
 
Once you have a policy you need a system.
 
We know what we do and this is how we do it.
 
Ever buy from a hugely successful company like McDonalds? Do they have a system that enables them to meet their policies every time, do they control their system to the extent where they control everything they purchase and everything they sell – you bet they do.
 
By the way, those of you in big companies, like dozens I could mention, do you have policies and systems? Yes?
 
Then why do you make hundreds or thousands redundant at a stroke? What was the policy that enabled this huge over-manning and whilst we are on the subject, why are the people who set this failed policy still there setting new ones?
 
Policy and systems it's that simple. Let's get practical.
 
1. Write a policy on stock – now! Production levels driven by sales? You must have a policy on stock. Now.
2. Write a policy on products – now. Sell as many varied products as we can, concentrate on specifics, add value with service. Do not pick your top 6 profitable products and concentrate on them, it does not work. What if you sell stationery and your top 3 products are a blue pen, a database CD and a desk – try and build a policy around those.
3. Write a policy on people – now. People work for you, you do not need more people just because you are selling more; they might be low-profit lines, they might be products which are sold without much human intervention. You do not need more people because it's taking longer to process orders, you need a better system. You do not need people because your managers tell you, you might need better managers.
4. Try to order in bulk. Just-in-time is the current fad but buying a few items every day may not be cost effective. And another thing, when you go to the supermarket do you get seduced by 3-for-2, I know I do, is that your policy in your business? Buy what you want at the best price you can get, not what another company is trying to off-load.
5. Read all the cold-call faxes and take all the cold-calls. Well maybe not you, but get someone to take them and evaluate. There are some outstanding deals to be done with companies who can control their costs and offer cheap deals. You do not need me to tell you that a lot of it is rubbish, but in my experience companies who are willing to spread their message around and pay large sums of money to cold-call everyone are worth talking to. And their quality of service will outpace those companies who take your business for granted.
6. Contact similar stock holders for ‘partnering arrangements': bulk purchasing is a must for small business's to survive. Get in first, control the partners, you may end up with only a few companies willing to join with you, but they are like-minded and confident in themselves. Companies who are afraid to try new ways are the companies you want to prey on, not pray with.
7. Ignore high-price, high volume, high anything else but high profit items. If you have a product that is high-profit do not drag it down by letting it support low-profit items. Use the high profits to research other high-profit products rather than support low-profit going nowhere items. And when you have a high profit item, flog it to death. One day it will no longer be a high-profit item, it is no use trying to catch up then.
8. Tell all your staff, your customers, your suppliers, your bank about your high quality products and services. Not price, not how good your people are, not how good you are going to be, how high quality your products and services are now. And then find a way to meet these promises.
9. Systemize. Now. Everything should be systemized, everything. This is what we do and this is how we do it. Everything, everyone is part of your system. You do not need great people in a bad system, you will not succeed. A great system with average people, what like McDonalds, well what have they done lately?
 
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