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What part of your business pays the bill?

Business is becoming increasingly more competitive, and most business owners are facing pricing pressures. One strategy to face this challenge effectively is to find your profit centres (i.e. Cash Cow).
This is not easy. You can do this by first holding a strategic workshop with all the key leaders in your company and undertake a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) of your company and your competitors. Next, talk to other people friends in the industry, suppliers, competitors, trade journals and get their opinions on the industry. In short, by knowing your company, your industry and your market, you will be able to discover a great new source of profits.
The best way to find your profit centres is through customer feedback. A good tactic in getting the right kind of feedback is to go to the top twenty per cent of your customer base and ask them some of these questions:
  • Why do you do business with our company?
  • How did you first come into contact with our company?
  • Why did you first decide to do business with us?
  • Why do you continue to do business with us?
  • What do we do better than anyone else? What do we do well? What do we do poorly?
  • What other products, services, or solutions would you like to see us add to our offerings?

The answers to these questions will point you toward the real profit centres of your business. Yet another source for new profit centres is new markets. To discover these new markets, think laterally to expand your customer base. First, look at your customer base and the problems that you have solved for them. Then, have your team consider what other kinds of businesses have similar problems, and then try to solve those problems for these new customers.

Maintaining Your Profit Centers

Also remember that you should keep your focus on main profit centres, and ensure that they remain consistently profitable. This is equivalent to “knowing what you do well, and sticking to it.” Stay close to your core areas of business and maintain a consistent focus. Maximize the profitability of existing products and services through repackaging or redistribution. Then you can invest in new products and services that complement your core offerings. This is also key to creating new profit centres. For example, training, customization and consulting services may be made available for software developers along with the software products.

Finding New Profit Centers Across The Globe

The task of finding new profit centres for a company depends on the nature of the company and its products and services. And many companies will find that their main profit centres are geographical in nature. Focusing on geography to identify and create new profit centres entails establishing your company as a global player (you can use the Internet to do this).
New profit sources result from the ability to enter and open new geographical markets. Find new regions by first identifying a good partner to test the market for you. Then, when the market proves itself, you can either acquire the partner or set up your own operation.
The most important success factors for establishing profit source and becoming a truly global company are:
  • Appearing local to each country or region by speaking their language, dealing in their currency, following their business norms and customs, and providing them support locally;
  • Offering a global product or service that will be in demand regardless of the country or region;
  • Leveraging resources from across the globe in a seamless manner to help solve local problems;
  • Creating a realization among customers and prospects that they are not alone in using the product or services of the company;

Many customers throughout the world are using the same. Strength and comfort lie in diversity and numbers.

3 biggest mistakes salespeople make in tough times

1. They reduce face-to-face calling by 38%

According to a purchasing management study, during tough times, salespeople call on customers at 62% the rate they call on customers during good economic times. Clients can easily sense this and so the best remedy is to increase your calling by 25%. If you call on customers at a rate of 125% of the rate you normally call, and your competition calls at a rate of 62% of the rate they normally call, you have effectively doubled your coverage.

2. Salespeople believe everything customers tell them and allow it to bias their worldview

If you call on four customers and all of them tell you the times are tough, you may erroneously assume that it’s tough for everyone. Never assume that because some customers are suffering, all are suffering. You may create your own misery with a customer if you gave him the opportunity to wield bad news for negotiating advantage.

3. Salespeople cut price versus value

This is always the easiest way to resolve price objections, but generally, the costliest way for sellers to handle them in tough times. When you cut the price at the drop of a hat, say goodbye to your margins because it’s doubtful they will increase when the times get better.

Back to the business wealth basics

Who is the trailblazer in your industry?

If you are looking for new business ideas, seek out the ideas that big corporations have dismissed. Often, corporations will throw out innovative ideas at the slightest critical comment because corporate executives are afraid to take risks.

Be respectful

Do not look down on business opportunities that may seem beneath you. As long as it’s a decent, ethical and moral business, it doesn’t matter if it may seem unglamorous.

Always Price to Value

There are three words you must remember when you start deciding on how much to price your product or service: price to value. When you price to value, you set your price according to the value your product or service gives to customers. Of course, to enable to do this, you must first evaluate the value of what you offer.

Sell Outcomes

Remember that there are only two reasons why customers buy or avail of a product of service:
1. Customers want to solve a problem.
2. Customers want to feel good.

Speak in the outcome that your product gives. Remember, you are selling the outcome and not your product itself. If you are selling floodlights, you might tell a grocery owner that the lights will serve to attract customers who wish to shop at night. These extra customers generate extra income for the grocery owner (e.g. crisps, milk, snacks etc).

Keep your home locked

Some businesses exist to steal ideas from small businesses and make them theirown. Therefore, it is important that you patent what you can. If a patent is not possible, then learn to keep it a secret. Remember, if it is valuable to you, it is also valuable to your competitors.

Take that shot

Do not be afraid to make mistakes. Remember that no one will care about the number of sales calls you failed to close. People will care more about that one successful sales call you made. If you don’t try, you will never succeed. Even if you fail in your endeavor, give yourself a pat on the back because you tried to do something that would help the business. Keep attempting. Don’t stop. Sooner or later, you will hit that home run.

Who is the hunter?

If you are not a fantastic salesperson, the first thing you must do is to hire someone to sell for you. In fact, it is right to prioritize hiring someone who can sell the product; rather than hiring someone who can create the product. In your small business, make sure that both you and your staff know that everyone’s main priority is to get and keep revenue-paying customers.