by MHolland | Nov 13, 2024 | Business Tips, Cash Flow, Selling Tips
When it comes to sales and marketing, many businesses are tempted to treat price as the ultimate selling point.
But does focusing solely on price really drive the best results?
Studies suggest that it may not be the deciding factor we think it is. Instead, it is just one component of the larger value customers consider before making a purchase. Here, we will explore why focusing beyond price can increase profitability and customer loyalty.
The Myth of Price as the Driving Factor
Price is frequently believed to be the single most important aspect of a customer’s purchasing decision. However, data tells a different story. According to one survey, only 15% of customers make decisions solely based on price, while a whopping 68% leave a business because they feel that it is indifferent to them. This insight challenges the notion that lower prices alone can attract and retain customers.
Customers prioritize factors that give them a sense of value beyond mere cost. They want solutions that address their needs, along with a positive experience. As a result, focusing exclusively on price often overlooks the real motivations behind a purchase.
Understanding Customer Decision Factors
When considering a purchase, customers typically weigh various elements. Here are some of the top factors besides price:
- Quality: Customers want products or services that meet their standards and last over time.
- Customer Service: Excellent customer service adds significant value, as customers want to feel acknowledged and supported.
- Convenience: Easy access, fast delivery, and flexible payment options all make a company more appealing.
- Warranties and Guarantees: Risk reduction through warranties offers peace of mind.
- Personalized Assistance: Many customers appreciate knowledgeable advice and support, especially for more complex purchases.
These factors combine to create a perception of value that transcends the simple dollar amount.
A Closer Look – Why Customers Leave
In the same survey, customers were asked why they chose to leave a business. The reasons were illuminating:
- Convenience accounted for just 3% of customer losses.
- High-level relationships—such as a shift to a trusted friend or family member’s business—represented 9%.
- Product/price/time concerns accounted for 15%.
- Finally, perceived indifference—the impression that a business did not genuinely care about its customers—was the leading cause, at 68%.
This shows that price is not the primary reason customers leave; rather, it is the lack of personal engagement and attention. When customers sense that a business does not value their patronage, they quickly turn to a competitor that does.
Real-World Case Studies: Price Is not Everything
Many businesses that consider themselves in “price-sensitive” industries have discovered that focusing on non-price factors can boost their profitability. Here are two examples:
- The Electrical Goods Market: This industry might seem entirely price-driven, but an independent study found that only 18% of customers based their purchases on price. The majority were more interested in features and the benefits those features offered. Nearly half (42%) of customers made their choice based on the product’s features and the perceived advantages those features would bring them.
- Hot Chicken Store vs. Chain Franchises: An independent chicken shop found itself struggling against larger chain franchises with more purchasing power, which allowed them to offer lower prices. After a strategic decision to raise prices rather than try to compete, the owner saw an increase in profits. This pricing decision allowed him to focus on differentiating his business, highlighting a customer experience that set him apart from his competitors.
Both examples illustrate the power of shifting focus away from pricing wars and toward creating a unique value proposition.
The Cost of Discounting
Many businesses use discounting as a strategy to boost sales, but the math behind it may surprise you. For example, if your profit margin is 30%, a 10% discount requires an astonishing 50% increase in sales to maintain the same profit. In other words, discounting is often less effective than anticipated and can even harm long-term profitability.
In contrast, increasing prices can enhance profits without major losses in sales volume. At a 30% profit margin, raising prices by 10% means you could afford a 25% decrease in sales volume before profits fall below previous levels. While discounting can make a quick sale, it is rarely a sustainable way to grow profits.
Shifting the Focus to Value and Service
So, what is the alternative to relying on price as the primary marketing tactic?
Focusing on value-driven service, tailored customer experiences, and a unique business identity can be far more powerful. Here is how:
- Better Service, Better Sales: Companies with a focus on “awesome service” give customers a reason to stay, pay a higher price, and return. High-quality service not only leads to immediate sales but also creates long-term loyalty. In fact, studies show that improving customer retention by just 5% can increase profits by as much as 25%.
- Understanding and Meeting Customer Needs: When customers inquire about price, it is usually just the beginning of their decision process. Businesses that can look beyond the price question and explore customers’ needs—such as specific product features, customization options, or delivery requirements—demonstrate an understanding and commitment that resonates with customers.
- Training and Consistency: It is essential to train employees to deliver consistent, high-quality customer service. Programs like “Towards Awesome Service” can empower employees to engage with customers more effectively, creating a culture of service that naturally stands out.
Your Action Plan to Move Beyond Price
By broadening the scope of your business strategy, you can differentiate yourself from competitors who focus solely on pricing. Here are some steps to start:
- Evaluate and Adjust Pricing Policies: Review your approach to discounts and consider how adjusting prices might impact your bottom line. Avoid excessive discounting, which can erode long-term profitability.
- Invest in Customer Service Training: Equip your team to offer service that goes beyond customers’ expectations. Programs focused on “awesome service” can be especially beneficial.
- Ask the Right Questions: Train staff to go beyond quoting a price when interacting with customers. Encourage them to ask about the customer’s specific needs, preferences, and timelines.
- Consult with a Financial Expert: An accountant or financial advisor can provide insight into effective pricing strategies that support profitability without undercutting value.
In Conclusion
Price, while important, is rarely the most compelling reason customers choose to buy from a particular business. Often, they are looking for a positive experience, a feeling of value, and a sense of connection with the business. By shifting focus away from price and toward quality, service, and a unique customer experience, your business can stand out in ways that drive customer loyalty and profitability—without racing to the bottom on price.
Thanks for reading…
by MHolland | Nov 8, 2024 | Accounting Software, Business Tips, Cash Flow, Cloud-based Accounting
I have written in the past about the need to switch from manual cheques to online bill payments…
While cheques seem secure (you are using paper and pen, after all), online bill payments deliver awesome advantages in speed, security, and cost.
Cheques are risky. Online bill payments are secure.
That is a flip in your thinking, right?
Let us go through the seven benefits.
Benefit One – Fast and Simple
Online payments happen fast—no more waiting on the mail or bank delays. Payments are instant, freeing up time and simplifying the process.
- Quick Processing: With online payments, funds transfer immediately, bypassing the hassle of mailing and clearing cheques.
- Effortless Transactions: Forget about writing, signing, and mailing cheques. A few clicks, and it’s all taken care of.
Benefit Two – Stronger Security
Cheques can be lost, stolen, or altered. In other words, ripe for fraud. With online payments, digital safeguards work to protect your accounts, making fraud much harder.
- Top-Notch Encryption: Banks and payment platforms use advanced encryption to keep data secure.
- Around-the-Clock Monitoring: Banks and payment platforms monitor for unusual activity, flagging anything suspicious.
- Two-Step Authentication: Extra security steps add a second layer of defense, reducing the risk of unauthorized access.
Benefit Three – Lower Costs
Running a business means watching expenses. Cheques require printing, mailing, and processing fees that can add up. Online payments save money by cutting out these extra costs.
- Goodbye to Printing and Postage: No need to pay for cheques, envelopes, or stamps.
- No Lost Check Headaches: Online payments remove the risk of lost cheques and the hassle of reissuing them.
Benefit Four – Control Cash Flow
Online payments let you manage cash flow with precision. Scheduling and automating bills helps avoid late fees, and you always know when money is moving out.
- Easy Scheduling: Automate recurring payments to ensure bills are paid on time, every time.
- Predictable Cash Flow: Set dates for payments so you know exactly when funds will leave your account.
Benefit Five – Go Green, Save Green
Online payments aren’t just convenient—they’re better for the environment. They eliminate the paper waste from cheques and the carbon footprint of mail delivery.
- Paper-Free Payments: No more cheques, no more envelopes—just instant, eco-friendly transactions.
- Reduced Emissions: Skip the postal service and the delivery truck, keeping your operations lean and green.
Benefit Six – Streamlined Record-Keeping
Online bill payments mean clear, organized records. Every transaction is digitally recorded, making bookkeeping a breeze and audits smoother.
- Automatic Record Generation: Online payments create a digital record, reducing errors and streamlining account reconciliations.
- Easier Audits: Digital records make it simple to trace and verify expenses.
- Software Integration: Syncing with accounting software like Xero or QuickBooks reduces manual work and ensures your records are up to date.
Benefit Seven – Build Better Relationships
Prompt payments build trust, and online payments make timeliness easy. Vendors know they’ll be paid on time, and customers appreciate a straightforward, reliable process.
- Reliable Vendor Payments: Scheduled payments keep you in good standing with vendors and partners.
- Customer Convenience: For customer-facing payments, digital options make it easy and fast—an experience customers love.
In Summary
Cheques have had their day, but online payments are faster, safer, and more efficient. For businesses focused on improving cash flow and cutting costs, going digital is a smart move.
Switching to online payments means easier financial management, stronger security, and streamlined operations—making every transaction simpler for you and your business.
Thanks for reading…
by MHolland | Oct 30, 2024 | Business Tips, Selling Tips, Systems
A family business is more than a company. It is legacy, values, and generations of demanding work. It is unique. And just like every family is different, every family business has its own way to define success. So how do you know if you are on the right path?
Key Performance Indicators (KPIs) can help. KPIs keep your business on track. They are like the dashboard in an aircraft. Without KPIs you are flying your business blind.
Why KPIs Matter
KPIs are your business’s health check. They are the numbers that tell you if you are thriving or just getting by. They give you focus. They drive decisions. Think of KPIs as the vital signs of your business. With the right KPIs, you will know where you are winning and where you need to improve. Every business and organization needs this insight.
Step One – Align KPIs with Goals
It starts with a simple question – what is your 3-year Vision? Where do you want to go?
For some, it is growth – it is increasing revenue.
For others, it is improving efficiency or customer loyalty.
Your KPIs should match these goals. No random metrics. If your goal is growth, measure revenue or profit margins. If your goal is customer loyalty, look at repeat sales or retention rates.
Every KPI should connect back to what matters most. This keeps you focused and cuts out distractions.
Step Two – Make KPIs Measurable and Clear
Numbers matter. The best KPIs are specific and measurable. Think percentages, timeframes, or raw numbers. For example – “Increase monthly revenue by 15%” or “Reduce customer complaints by 25%.”
These are clear. They are easy to track and easy to understand. Avoid vague goals like “Improve customer service” without any numbers. Specifics matter. The clearer the KPI, the easier it is to measure it.
Step Three – Get a Good Mix of KPIs
KPIs should be balanced. A good mix looks at the big picture.
Financial KPIs like net profit or gross margin are crucial. But they are not the only numbers that matter.
Customer satisfaction, employee turnover, and process efficiency matter too. Each tells a part of the story. Financial metrics show profit and cash flow. Customer metrics show loyalty. Employee metrics show team stability and morale. Together, these KPIs give a full view of your business’s health.
Step Four – Keep KPIs Realistic
Ambition is great but keep KPIs achievable. Aiming for the stars is fine, but do not let it become unrealistic. Unrealistic KPIs can lead to burnout, disappointment, and poor decision-making.
Think about why you are in business in the first place. Most people go into business for freedom. No one wants to be a slave to your business. Do you?
Start with reachable goals and increase gradually. If you are tracking profit margin, aim for a 5% increase this year, not 50%. Realistic KPIs keep your team motivated and moving forward. Small, steady wins add up.
Step Five – Review and Adapt KPIs Regularly
KPIs are not set in stone. As your business evolves, so should your KPIs. Review them regularly. Every quarter or every year, check if they are still relevant.
Has a goal changed? Adjust the KPI.
Has the market shifted? Update it. Adaptable KPIs keep you responsive to change. Your business is dynamic—your KPIs should be, too.
KPI Ideas for Family Businesses
Need ideas for KPIs? Here are a few to consider:
- Gross Profit Margin – Shows your profitability after direct cost of sales.
- Customer Retention Rate – Loyal customers are your backbone. Track them.
- Operating Cash Flow – Essential for understanding your cash movement.
- Employee Satisfaction – High satisfaction often means lower turnover.
- Sales Growth Rate – Tracks how fast your revenue is growing.
- Inventory Turnover – Ideal for businesses with physical goods. Shows how often stock is sold and replaced.
- Debt-to-Equity Ratio: A key financial health metric. Lower ratios indicate stability.
Each KPI tells a piece of the story. Together, they give you a roadmap for success. They show you what is working and what is not. They keep you accountable. And they keep you moving toward your goals.
In Conclusion
KPIs are a tool—a powerful one. They are not just numbers; they are a compass.
With the right KPIs, you have a way to measure success. You have a way to stay focused. And, most importantly, you have a way to ensure your business thrives for years to come. So, choose wisely, measure consistently, and watch your hard work pay off.
Thanks for reading…
by MHolland | Oct 25, 2024 | Accounting Software, Business Tips, Cloud-based Accounting
Running a business or organization is challenging enough without losing money you didn’t even know you were losing!
Profit leaks—small, unnoticed losses—can quietly drain your bottom line.
There is a solution – using your basic reports in a new way.
At ControllershipPLUS we take pride in highly accurate reports. Reports and numbers you can trust. There is nothing more irritating than going through your monthly reports and having that gnawing gut feeling that things are just “not quite right”. That never happens with our reports.
Starting with accurate, reliable reports, you can shine a light on profit leaks and plug them before they get out of control.
Let us dive into how financial reports can help you keep more of your hard-earned profits…
What Are Profit Leaks?
Profit leaks are those small, sneaky drains on your finances that might seem insignificant at first. Maybe it’s a supplier charging a little more each month, or uncollected invoices piling up.
Over time, these tiny leaks turn into major drains. If you don’t track them, they can seriously cut into your profits. The good news? Financial reports are like a magnifying glass for finding and stopping them in their tracks.
Especially ControllershipPLUS reports that are accurate, reliable, and timely.
The Reports You Need
Not all reports are created equal. Some are perfect for spotting leaks. Here are the key ones to keep an eye on:
- Income Statement (Profit & Loss): This is the big one. It shows all your revenue and expenses. If costs are going up but revenue isn’t, you’ve got a leak. Look for rising expenses that don’t add value, like bloated overhead. Overhead is especially problematic because most overhead costs are fixed and so do not go down when revenue drops.
- Cash Flow Statement: This report shows how money flows in and out of your business. If you are making sales but still struggling with cash flow, you have a problem. Cash leaks here could mean you are paying out more than you should or not collecting money fast enough.
- Budget vs. Actual: Think of this as your business’s reality check. You planned to spend a certain amount on marketing, but somehow it doubled? That’s a leak. This report shows exactly where your actual spending is veering off from the plan.
- Accounts Receivable Aging: If customers aren’t paying you on time, that’s cash you are missing out on. This report helps you track overdue invoices and reminds you which clients need a little nudge to settle up. We use a software for many of our clients to help stay current with our client’s receivables.
Where Leaks Happen
Now that you know what to look for, where do these leaks usually show up? Here are a few of the most common areas:
- Overhead Costs: Office supplies, utilities, rent—overhead costs creep up if you are not watching. Regularly reviewing your overhead expenses helps you find areas to cut back. Can you switch to energy-saving utilities or renegotiate your lease? Every little bit helps.
- Labor Costs: If you are paying out more in wages but not seeing a boost in productivity, that’s a red flag. Maybe some roles are overstaffed, or employees need better training. Tracking labor costs as a percentage of sales will show you where the imbalance is.
- Inventory Management: Holding too much inventory ties up cash that could be better used elsewhere. Not enough? You’re missing out on sales. Keep an eye on your inventory turnover rates to avoid stockpile buildup or missed revenue opportunities.
- Supplier Costs: Suppliers may slowly raise prices over time. If you don’t review these costs regularly, you might end up overpaying. Check your vendor agreements regularly and do not hesitate to negotiate for better deals.
- Operational Inefficiencies: Rising operational costs—like manufacturing, delivery, or logistics—are another common leak. Are there tasks that could be automated or outsourced? Use your cash flow statement to pinpoint where you’re spending too much on day-to-day operations.
How to Plug Profit Leaks
Once you have found the leaks, it is time to plug them. Here is how to take action:
- Set Benchmarks: Use your financial reports to set performance targets for each part of your business. For example, cap overhead at a certain percentage of total revenue. Compare regularly to see if you’re hitting those targets and course-correct if needed.
- Review Regularly: Profit leaks do not fix themselves. Commit to reviewing your key financial reports—income statements, cash flow, budget vs. actual—at least once a month. The earlier you catch a problem, the easier it is to fix. This is why one key deliverable with ControllershipPLUS is having a monthly meeting to go over everything from the past month and year-to-date so course corrections can be taken.
- Use the Right Tools: The best way to stay on top of everything is with the right tech. Cloud-based accounting platforms like Xero let you run reports anytime and from anywhere. They also automate a lot of the reporting process, giving you real-time data so no leak goes unnoticed.
- Involve Your Team: You cannot do it all alone. Share financial reports with your department heads and managers. When they see the data, they can take responsibility for their budgets and help keep costs down. Accountability goes a long way in preventing leaks.
It is Better to Outsource Your Finances Than Do It Yourself
Financial reports are powerful, but digging through them and figuring out what they mean can be time-consuming. That’s where a trusted accounting partner, like ControllershipPLUS comes in. We analyze your reports, spot profit leaks, and give you actionable insights—so you can focus on running your business, while we handle the numbers.
Conclusion – Protect Your Profits
Profit leaks are the hidden enemy of every business, but they do not have to be a fact of life. By using financial reports to keep a close watch on your expenses and revenues, you can spot leaks early and plug them before they grow. The result? A healthier bottom line, smoother operations, and more money in your pocket.
Thanks for reading…
by MHolland | Oct 16, 2024 | Accounting Software, Business Tips, Cloud-based Accounting
Growth is exciting, right?
However, if you scale unthinkingly, profit margins can shrink if you are not careful.
The trick? Boost efficiency, improve cash flow, and cut waste—without slowing growth.
Here is how to do it.
Number 1 – Streamline Operations
More growth does not have to mean more chaos. Tighten up operations for smooth, efficient scaling. Put systems in place for everything.
Start with operations, then marketing.
- Automate Repetitive Tasks
Free up your team by automating routine work. Software tools can handle payroll, invoicing, and inventory tracking—faster and more accurately than humans.
- Standardize Processes
Create clear, repeatable processes for key tasks. This ensures consistency and reduces time spent putting out fires. You can use software to help you create Standard Operating Procedures.
Number 2 – Improve Cash Flow
It is a cliché I know, yet cash is king. Managing it well ensures you are not just growing; you are growing profitably.
- Get Paid Faster
Tighten up your invoicing. Send invoices immediately, follow up on overdue payments, and offer discounts for early payments.
- Delay Payments (Where Possible)
Negotiate better terms with vendors. Pushing payments out by just a few days can give you a lot more flexibility.
- Track Your Cash Flow Regularly
Keep a close eye on cash in and out. Use real-time reporting tools to spot issues before they become problems.
Number 3 – Cut Waste Without Sacrificing Growth
Cutting costs does not mean cutting corners. It means using resources smarter.
- Review Your Expenses
Conduct regular expense audits. Are you paying for software no one uses? Could you negotiate better rates with suppliers?
- Reduce Energy Costs
Small tweaks like energy-efficient lighting or automated thermostats can save money over time.
- Optimize Your Workforce
Invest in training so employees can work smarter, not harder. The more efficient they are, the more profitable you become.
Consider offshoring Team members for non-core activities to lower wage rate countries like the Philippines.
Number 4 – Focus on High-Return Investments
Not all spending is bad. The key is to invest wisely.
- Invest in Technology
The right tech can speed up operations, reduce errors, and lower costs. Do not skimp on tools that boost efficiency.
For our clients, we are hyper efficient at using online software for all repetitive accounting and bill paying tasks.
- Focus on Your Best Customers
Double down on products or services that bring in the most profit.
Upsell to your top clients and nurture those relationships.
Scaling can be both exciting and challenging. But by streamlining operations, improving cash flow, and cutting waste, you will maximize profit margins while keeping your growth on track. Happy scaling!
Thanks for reading…
by MHolland | Oct 11, 2024 | Accounting Software, Business Tips, Cloud-based Accounting
As you know we manage all your internal accounting processes using online software…
Cloud-based platforms like Xero, Plooto, HubDoc, and ApprovalMax have made managing your finances easier, timelier, more accurate and efficient. But with the convenience of these tools comes the challenge of keeping your financial data safe.
In this post, I will walk you through the key security features of these platforms, share some common risks to watch out for, and offer tips on how you can protect your business from potential threats. Let us dive in!
Why Protecting Your Financial Data Is So Important
Your business’s financial data is a goldmine for cybercriminals. From financial transactions and payroll to sensitive tax records, your data holds everything hackers want. And the larger your business, the more attractive you are as a target.
Using online accounting tools like Xero, Plooto, HubDoc, and ApprovalMax is a smart way to streamline operations. Making sure they are secure is crucial.
Let us see how each of these platforms manages security and what you can do to keep your data safe.
Xero: Simple Accounting with Serious Security
Xero is known for being user-friendly, but it is also packed with features to keep your data secure. We are making sure that its security features are being utilized for you.
Xero’s Security Features:
- Multi-Factor Authentication (MFA): To log in, you do not just need a password—you also need a code sent to your phone, making it harder for anyone to hack your account.
- Encryption: Your data is protected with encryption both while it is being transmitted and when it is stored on Xero’s servers.
- Regular Backups: Xero backs up your data regularly, so you do not have to worry about losing everything if something goes wrong.
- User Permissions: For your benefit, we control who gets access to what, making sure only the right people see sensitive financial information.
We Keep Your Data Safe By:
- Enabling MFA: We make sure all users on your team are using multi-factor authentication to add an extra layer of protection.
- Monitor Activity: We keep an eye on user activity logs to spot any unusual behavior before it becomes a bigger problem.
Plooto: Secure and Streamlined Payments
Plooto takes the hassle out of payments, and it is designed with security in mind. Whether you are paying suppliers or approving invoices, Plooto ensures that your transactions are secure.
Plooto’s Security Features:
- Encryption: Every payment you process through Plooto is encrypted, so sensitive payment data stays safe.
- Approval Workflows: Plooto requires multiple layers of approval for payments, so no one person can send out money without the right checks in place.
- Audit Trails: Every transaction is recorded, giving you a clear view of what happened and who approved what.
How to Stay Safe:
- Tighten Approval Workflows: Make sure you review your approval processes regularly so that only the right people are authorizing payments.
- Review Access Controls: Regularly check who has access to approve transactions and limit it to those who absolutely need it.
HubDoc: Safe Document Storage with Less Paperwork
With HubDoc, you can say goodbye to piles of paperwork. This platform helps you organize and store financial documents, and the security measures in place ensure that your sensitive files are safe.
HubDoc’s Security Features:
- Bank-Level Encryption: HubDoc uses the same type of encryption as banks, keeping your documents secure when they are uploaded and stored.
- Automatic Data Extraction: HubDoc extracts data from invoices and receipts automatically, reducing the chance of manual errors that could lead to security issues.
- Multi-User Roles: You can control who has access to which documents, helping keep sensitive data away from unauthorized users.
How to Stay Safe:
- Set Clear Permissions: Assign clear roles for who can view and manage documents, ensuring that only authorized users have access.
- Remove Old Documents: Set up a process to regularly review and delete old, unnecessary documents to reduce security risks.
ApprovalMax: Keeping Approvals Secure and Efficient
ApprovalMax helps you control who approves what in your accounting processes, adding an extra layer of oversight. It is a great tool for keeping things running smoothly, but it is also packed with security features to protect your approval workflows.
ApprovalMax’s Security Features:
- Segregation of Duties: ApprovalMax ensures that no single person has the power to approve transactions alone, which helps prevent internal fraud.
- Role-Based Access: Just like the other platforms, ApprovalMax allows you to control who has access to which approvals, based on their role in your business.
- Audit Trails: All approval actions are tracked, giving you a full history of who approved what.
How to Stay Safe:
- Audit Your Workflows: Regularly check your approval workflows to make sure everything is set up correctly, and no unauthorized approvals are sneaking through.
- Limit Approval Rights: Only give approval rights to people who need them—and remove access when roles change.
Conclusion
When it comes to managing your business’s finances online, security should be a top priority. Platforms like Xero, Plooto, HubDoc, and ApprovalMax come with built-in security features.
We ensure, on your behalf, that they are properly configured and used. By setting up multi-factor authentication, managing access controls, and reviewing your workflows regularly, we help keep your financial data secure, so you can focus on growing your business.
Thanks for reading…
