Tips for Controlling Your Business

by WOHe

Who controls your business? As a kitchen and bath dealer, are
you the one making the decisions that affect your bottom line and
ultimately the success and of your company?

In the present business environment, many kitchen and bath
dealers are no longer running their own firms. Suppliers,
salespeople, customers and competitors are all gaining more
influence. These additional influences can pull your business in an
unprofitable direction if you’re not meticulous in focusing your
company on the right objectives.

As suppliers, salespeople, customers and competitors interact
with your company, it’s vital that you identify how they affect
your business and develop a plan to keep them from steering your
business off the route to success.

Suppliers
The most commanding outside forces influencing your business are
your suppliers. Suppliers work very hard to gain as much influence
in your business as possible. Displays, samples, literature and
sales programs are all used to gain space and influence within your
company. As an owner/manager, you must carefully weigh these
incentives against the product’s ability to generate the sales and
profit margins you require.

Once suppliers are in your showroom their natural desire is to
increase the sales of their products. In order to ensure that
they’re getting the largest portion of your company’s sales, some
suppliers endeavor to direct your business’ sales from the inside.
This inducement comes in the form of incentive programs.

Incentive programs are most effective when they are aimed
directly at your salespeople. Rewards are presented and paid
directly to your employees to manipulate what products your
salespeople sell.

If done in coordination with your company’s goals and on a
limited basis, these incentive programs can be quite effective for
both the supplier and your business.

On the other hand, if these programs are continuous and you are
not carefully monitoring them, incentive programs can be
dangerous.

Incentive programs directed unchecked towards your employees can
give suppliers undue control over your business. Once they have
indoctrinated your salespeople and captivated them to their
incentives, they have effectively taken control of your sales
team.

You may find that sales in the product line are increasing but
the margins are lower than your company requires. Product quality
or expediency could decrease or, for whatever reason, you might
determine that your company’s needs are better met by another line.
The suppliers’ gratuitous influence on your sales force can make it
very difficult for you to enact the changes that you deem
necessary.

As the business owner, it’s your responsibility to ensure that
the influence suppliers command is limited to programs and
offerings that help your business succeed.

Keep close tabs on these programs; make sure that you’re a
buffer between them and your employees. Control their programs to
keep them from controlling your business.

Salespeople
If suppliers are the most commanding outside force influencing your
company, salespeople are the most powerful inside force exerting
control on your business. If left unchecked, a company’s sales will
be determined by the salespeople’s preferences and familiarity with
certain manufacturers’ products.

Salespeople are invaluable to your company, but you need to
ensure that they are selling the products that are profitable to
you. They may have an affinity for products that they are currently
selling or have sold in the past. They have familiarity and a
comfort level with lines that they already know and obviously, it’s
easier to quote and sell products that you already know.

This is helpful when the products they’re accustomed to are the
ones that you’re making your preferred profit margins with.
However, if you’re attempting to drive sales in other products, it
can be a problem.

As the business owner/manager, you need to keep a firm grip on
what sales are really the profitable ones for your organization,
and to have a focused approach to training the sales force to sell
these products. If you are lax in this area, your salespeople will
control the products that you sell and you’ll be gambling that
these products are the ones that will keep you in business.

Consumers
One of the most overlooked influences in your business is your
customer. Your customers’ tastes, wants and desires have an
incredible amount of influence on your business, as they should.
Customers, though, can also end up managing your sales.

As today’s consumers shop around more, they have a propensity to
offer dealers the opportunity to bid for their business on products
that both you and your competitors carry. This is the simplest
order for your business to take. All you have to do is be the low
bidder, willing to work hard for less money. And, that’s exactly
what your company will do if you allow these transactions to take
place.

Your business offers products that are not only a better value
to that customer, but are also more profitable for you to sell.
Manage your company and use your expertise to educate your
customers on the value of the products that increase your bottom
line. You’ll find that selling is much more profitable than order
taking.

Competition
Many organizations allow the competition to determine their profit
margins. One of the most frequent questions I get from new
customers is, “How much profit should I have in my quote?” I
usually recommend at least 35 to 40%. Often the response is “I hear
that my competitor is working at 20%.”

Just because your competitor is willing to work for a 20% gross
profit does not mean you have to. Why would you subject your
company to that? You need to have a profitable long-term outlook.
Determine your own future. Look for products that you can offer
that are not commodities. Find products that allow you to determine
how much margin you can make without getting into a bidding war for
the same brand name product. Run your own business and determine
your own profit margins.

Who controls your business? It better be you. There are many
people influencing your company and pulling it in countless
directions, but it is your business and your bottom line.

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