Are you the only 'normal' person at your office?

Ever wondered why you’re the only ‘normal’ one at your office? Better understanding your behavioural profile, those of your colleagues and customers can help break down communication barriers and help you achieve results. It also helps overcome that feeling that everyone else around you is obviously completely insane!

The DISC model looks at a person’s natural behavioural style and the way they approach the world around them. Using the psychological theories of Carl Jung, William Moulton-Marston defined the four dimensional behavioural map (or DISC). 

To read more about DISC, click here
 

Christmas in September

Ever noticed that Christmas – the lead up to it and the event itself – is getting longer? In the week after Father’s Day the major retailers started putting up their Christmas decorations. For retailers and the hospitality industry, this can be a good thing. It gets people thinking that the end of the year is almost here; Christmas presents, planning parties, entertaining and fixing up the house, all come to mind with the share of the consumer’s wallet following.

For every other business, it can trigger delays with customers unwilling to commit to decisions until the New Year. Depending on your customer base, Christmas, New Year, and the end of the financial year are generally all critical points in the consumer psyche. It’s the time when people are making decisions about what to spend, what to cut back on, and what can simply wait until they return from holidays. Every good marketing plan should factor in these realities and implement accordingly. If the time to acquire each sale is slowing down, give your market an incentive to commit now or lay a firm foundation for the New Year. 

Talk to us today about a business plan going forward.

Business Scruples 

Understanding your market
Everyone thinks their market is price sensitive but how do you know whether it really is? Most of us are just a bit afraid of the reaction we might receive. STOP BEING PARANOID.

If you are dominated by competitors who have a market share the size of New Zealand and you have no differentiator, then you will be pressured on price. Whereas, if you are not dominated by your competitors or you are able to differentiate in other ways, you can take the focus away from price. Value conscious and price conscious are not automatically the same things.

If you have a more personalised product and interaction with your market, then it is a question of whether or not a marginal increase is going to make any difference to your customers. A price increase or a discount is a small consideration compared to the broader decision of whether to buy what you offer now, later, or never. No one likes to pay more but if your costs have increased then a price increase is merely a reflection of what is happening in the broader market.

The cost of discounting
Any fool can sell at a discount. You can’t be a success if you only focus on sales volume without identifying the cost of your discounting strategy.

Discounting creates a leverage impact on profits. Essentially, by discounting you are giving away some or all of your profits. The key is to understand the impact and just how far you can go. For example, a business with a 30% gross profit margin that offers a 25% discount needs a 500% increase in sales volume just to maintain the same position – and, in almost all cases, that’s just not going to happen. The result generally is that the business trades below its break-even point and generates a loss. You can only do that for a limited amount of time (and yes, some of your larger competitors might be engaging in a discounting war with you in an attempt to bury you once and for all).

Many businesses don’t understand the impact of pricing on their business and instead measure success by sales activity rather than by their gross profit. It’s such a feel good measure to fixate on.

Understanding your cost structure
Do you know what your real cost of doing business is? Your break-even point is the level of sales activity where your business is neither making a profit or a loss. You calculate your break-even point by dividing your fixed expenses by your gross profit margin. This figure represents the level of sales income you need to break-even. With this piece of information you will know, at any time, whether or not you are profitable (providing your fixed expenses and profit margin have remained constant).

Not only will your break-even point assist you to monitor business performance, it’s critical when deciding whether or not to offer a discount. If your break-even point is well below your current operating level then you have a good buffer in your profits to manage growth, invest in further capital opportunities, and to protect yourself against any sudden downturns in operating performance. And before you say “I know that” ask yourself how many people actually put this theory into practice. Even some of the largest businesses have been caught out on this one and tie up valuable resources in unprofitable projects and products.

Putting up your prices during the down times is not an act of social betrayal. If your prices have increased you should flow these through unless you are comfortable making less for the same amount of effort, or you are in an industry that is so price sensitive that you have no choice but to follow the crowd.

If you want to know where you business is up to and the best strategies for your individual business, talk to us today.

State Awards to cease on 31 December 2010

After 31 December 2010, State Awards will cease to have effect. Employers and employees who were previously covered by a State award will be covered under the relevant  Federal modern award from 1 January 2011.

NSW Industrial Relations is providing regular updates to assist employers and employees and help understand how the changes will affect them.

Talk to us today if you have any questions about this new change.