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A Small Business Success Story!


Thriving or Just Surviving?

“A Small Business Story with a Happy Ending”


By:

Mark Hordes

Mark Hordes Management Consultants, LLC

mark@hordesconsulting.com 713 416 1781 office

Houston, Texas


Jacob owns a family owned and operated grocery store and is frustrated that sales and profitability have “hit a wall” and are declining. Despite a good neighborhood location, in demand international products, and a reputation for honesty, being customer focused and fair prices, he just can’t seem to get ahead, and his profit per cent of each dollar of sale has fallen from 5.5% to 3.5% .


What can Jacob do, to turn this situation around?


As fourth generation small business owner, Jacob never had the time, money or interest to earn a business degree. He learned the business from the “boots up” from his father and uncles by putting cans on shelves, unpacking boxes, cleaning floors and helping customers find products from 4 am to closing at 9 pm seven days a week.


However, Jacob now realizes that perhaps there is more to running a small business than just “keeping the lights on” and just waiting for the next customer to come through the front door.


Four Actions Jacob Can Do Now That Will

Help His Business Grow


1. Review Store Layout. A good layout will maximize sales. Understanding customers buying habits needs to follow interest, product support and impulse buying. Jacob has an outstanding meat counter with great varieties and always, well displays fresh meats and fish, but right next to his meat and fish counter, he sells tobacco products, candy and foot ailment lotions and inserts. Ouch!


Jacob needs to create a merchandise display that has meat sauces, spices and even free samples. The cardinal rule of retail sales has always been, “display associated lines of merchandise close together.” Toothpaste, shaving cream and aftershave lotions are good examples.


2. Ignite New Demand. Jacob’s current customers know where his store and what he has to offer. What he doesn’t have is an ever increasing flow of new customers. Relying solely on his established demand without a fresh approach to direct sales promotion is like “trying to cook a great meal without any kitchen tools, pots or pans.”


A small business today cannot live without some social digital media advertising and Internet presence: Facebook, Twitter, Google+, Neighborhood Next Door, Discount Coupons, Stumble Upon and YouTube are just a few sites that can promote “pull through” fresh demand and interest.


“Case in Point.” Jacob’s family comes from a long line of great wine and cheese makers from Greece. As an experiment, Jacob held a “wine tasting” and “cheese making” demonstration with music and a traditional dance demonstration put on by his great grandmother supported by a human interest story on the Internet related to his family’s journey to America and his family picture in the local area neighborhood newspaper.


The event was a huge success, with over 100 new curiosity customers who purchased “bottles of wine” and “four varieties of the family home-made cheeses.”


3. Evaluate Purchasing and Inventory Control. Jacob has his favorite products that he likes to have in inventory at all times. Unfortunately, customers don’t seem to be all that interested. Like “old habits” that are hard to give up, money and shelf space is being wasted. Carrying too many similar brands in different product sizes in particular will produce an unfavorable situation. Having ten varieties of sauces from the same international source may not be the best idea.


In addition, what need consideration is to aggressively pursue discounts offered by his suppliers in return for prompt payment of invoices, which has been an issue with his business for some time.


Jacob has a problem with slow moving inventory. To free up cash flow and shelf space, Jacob needs to start a ‘liquidation slow moving inventory program.” Holiday’s come and goes, seasonal events sometimes attract only fleeting attention, and support merchandise styles change, and customer’s interest in new products and soft drink flavors “change as quickly as the weather.”


Some “hard and fast” slow moving inventory actions need to be considered:


· Create traffic merchandise obstacles with large displays of the items,

· Offer discounts for multiple quantity purchases,

· Offer a 1-cent sale,

· Have a grab-bag sale,

· Use red price tags,

· Offer, “Specials of the Day” with time limits,

· Ask customers who are checking out if they would be interested in the item on “Sale? Today,”

· Consider donating some merchandise like shirts, logo’s to a charity, sports little league team with a paid advertisement or article in the local newsletter promoting the next event.


4. Pay Attention to Monthly Credit Card Processing Fees. Everyone pays with credit cards. What is often not seen or fully understood by small business owners is the ongoing, every increasing expense credit card processing fees place on a business. Following a few simple ideas can save money that could be better directed into focused demand marketing and merchandising:


· Offer a discount to customers who choose to pay cash versus using their credit cards,

· Review and analyze your credit card processing fees each month, avoid the habit of just automatically paying the credit card processing invoice, like is often done with your telephone bill, that requires a PH.D in Mathematics to figure out

· Have an annual conversation with your credit card processing company to take advantage of promotions and ways to reduce processing fees and costs,

· Consider some new software technology products that track-point-of-sale purchases,

· Analyze various credit card processing vendors to determine the best fees. Sometimes it’s better to stick to just a few credit cards versus many, whose processing fees are too high.


Prologue: A Happy Ending


Jacob still has not obtained an MBA, hired an expensive consultant, or kept his store open 24 hour a day to generate more profits and sales. He has put into practice all of the ideas listed above, and has been able to increase his “profit percent of sales” from 3.5% to 7.9%, slightly higher than the 2018 average for small businesses, ”U.S. Government Small Business Data 2018”


Sometimes old patterns of working and behavior are hard to change, being open to new ideas and “tried and true” approaches, utilizing proven small business management practices can foster, ignite, create and sustain a “whole new world of possibilities and opportunities.”

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