Category Archives: Cost Reduction

Business Strategy – sales information

Sales figures are probably the most closely scrutinised of any business information. Timely reaction to any changing sales environment is essential in order to optimize sales and profits. Good analysis will lead to good strategy and I’ve listed below some of the points to consider.

Sales by product or service

  • Which product or service is most popular in this period?
    • Analyse reason for increase/ decreased sales,
      • Have you began or ceased a marketing campaign?
      • Has the economic, social or natural environment changed so as to be more/less conducive to such sales?
      • Is changed demand due to temporary circumstances or permanent?
      • Has your position relative to competitors altered e.g. cheaper, better quality?
      • Is one product or service complementary to the other e.g. mobile phone and phone case/ear phones?
      • Is one product replacing another e.g. notebook/laptops?
      • What are the reasons that sales mix now differs from your original prediction (forecast)? 

Strategy Options

Do you need to invest in a marketing campaign, allocate more resources to certain products or cease providing unpopular services? Or would a new or different offer revive sales?

Sales by customer  

  • Who are your best customers?
    • What products/services are your best customers buying?
    • Are they buying more or less than in previous periods?
    • Are your customers concentrated in one industry or geographical area?
    • Are you becoming too dependent upon one or a group of customers? 

Strategy Options

If a good customer hasn’t purchased a certain product recently maybe they need a nudge? Or possibly they are buying elsewhere and you need to know why this has happened. If you sell a lot to customers in one industry it might be worth contacting non-customers also in that industry. Too much dependence on one customer may also be a risk if you lose that one customer.

 

Sales by period

This information is best analysed over several years but within a period you may be able to divine patterns of expenditure.

  • What are the seasonal patterns of sales of different products/services over the year?
    • Are there specific months when you do or do not sell specific products?
    • Do your sales relate to specific promotional activity?
    • Do your sales vary with certain events eg national budgets, rain, Easter?
    • Do some product sales show unusual peaks and troughs? 

Strategy Options

If know you do not sell jumpers between June and September perhaps stock swimwear. Perhaps some sales are influenced by non-company publicity such as a public health campaign leading to more fruit sales. Alcohol or petrol sales often increase before budgets. Being aware means that you can be prepared for changes in demand and not miss that additional sale.

 

Of course sales revenue is very important but it is as important to ensure that all your sales are profitable. High sales could be the result of pricing so low that you are making a loss on a product. But that is a subject for another article.

Relevant measures will vary with the business. I’d be interested to know which particular sales measures you have found most useful.

Top 5 Tips of the Cost Reduction Trade

Guest post from Richard Gardiner of Lean Cost Management – cost reduction tips.

Cutting £20 note
Scissors cutting money

1. If you are purchasing or renting a new property make sure you lock in a utility (gas and electric) contract A.S.A.P. From the minute a new owner gets the keys to a property, the utility company, who has control of the meter, will be charging their highest tariff. Most utility companies will back date the new, lower rate which you have signed up for up to 3 months.

 

2. With waste collections keep the number of contract collections to a minimum. If you get busy or require more as a one off just call your waste collection company and they arrange for an additional collection. This will save you paying for empty bin collections.

 

3. Keep track of contract end dates and termination periods –Just because the contract end date is July per se doesn’t mean that you have until July to move it or cancel it. Some suppliers require 6 months notice to move or cancel a service.

 

4. You don’t get anything for loyalty these days, move suppliers at every opportunity, new business rates are ALWAYS better than renewal rates.

 

5. The termination letter is your best friend, 9 times out of 10 suppliers will find movement on their prices once you have issued it.

 

Richard is Managing Director of Lean Cost Management who are specialists in indirect, non-payroll cost reduction www.leancosts.com