Management System Plugs Profit Leaks

Would you ever consider selling and installing a kitchen without any plans? Not likely, unless you wanted a disaster.

There is a whole host of questions to ask before the planning even begins. What is the scope of the project? The timeline? The budget? What are the client's special needs, tastes, style, culinary interests? The answers to these questions, and many more, are key bits of information that go into planning a successful, profitable project.

To enter into a contract without first considering the answers to these questions would be foolhardy! And, it's definitely no way to run a business.

There are five critical areas of your business that need planning, consistent attention and review: Sales Forecasting, Prospective Customer Management, Consistent Process Control, Current Project Management and Job Cost Analysis.

Without "plans" for each of these five areas, your firm cannot maximize its profit. You are doing everyone involved a tremendous disservice by not preparing a "plan" for each of these items. You plan for your retirement, and your vacation, so why not plan for these five key areas that sustain your livelihood?

Sales Forecasting
How do you plan for incoming sales? Do you know your firm's forecasted sales for the next 30, 60 and 90 days? How about for each sales designer? What is the current closure rate for each designer? Can your designers instantly provide you with this information sorted by the probability of sale?

The real question is: How can you plan for the next steps in your business without knowing these answers? You can't!

You can guess, but you cannot plan effectively and make quality business decisions that way. Solid information is key for both sound kitchen planning and sound business decision-making.
Technology tools created for the kitchen and bath industry, such as TheKitchenPond's Kitchen Manager, gather this valuable information and present it to you in an easy-to-read format that enables you to start making informed decisions not guesses about your company's future.

The ability to accurately predict your incoming sales is a cornerstone of good business management. You can now plan for your company's future based on fact, not fiction.

Prospecting
Most kitchen and bath dealers don't manage their prospective clients very effectively. What do you do to really maximize every sales opportunity?

Most sales designers call a few times to follow up on prospects, maybe send a note, and eventually give up and move on to the next prospect without too much thought. This is especially true for commission-based sales designers.

If, as the owner, you're not actively involved in helping your sales designers close every sale, you are not maximizing your many direct and indirect investments in your salespeople investments like training, marketing, property improvements, samples and displays.

Think hard about your value to your company as the owner. Your sales designers look to you to provide the leadership and tools necessary to increase their chances of closing a sale. You should be conferring daily, or at least weekly, with your sales staff to review the status of each and every prospective client. You should be aware of the date the client made contact with your firm, the expected start date, the value of the project (guess if you must), the current status of the prospect, and the next planned interaction with that prospect.

Moreover, with the sum of this information gathered from your entire sales staff, you can easily understand trends forming with each phase of the process through which prospects move. By comparing the total dollars with each phase, you can quickly and easily understand your marketing effectiveness, upcoming sales, scheduling conflicts, etc. You, as the business principal, own the client information being held by each of your designers. Use it to your advantage. It will help to close a higher percentage of leads, generate more sales and earn more net profit.

Process Control
As a business owner, your ability to provide consistent processes for your staff is imperative. If your sales designers are permitted to write their own contracts, and that job deteriorates through no fault of your own, you can hold the sales designers somewhat responsible for that failure.

However, it is your firm that ultimately bears the burden of liability. You have to be in control of each process in your firm because you can't monitor every action, word or promise made by each employee. By controlling the process, you put into place the necessary checks and balances to ensure your firm's security and minimize your risk.

Most design studios today rely on some form of technology to gain some control over their business. Most have some type of accounting software from which they can pull valuable information about their committed projects, overhead and purchases. But this software will not tell you anything about the commitments your sales designers have made for your firm prior to contract signing. Isn't it too late to know about these commitments after the contract's been signed and the deposit's been accepted?

What is your "plan" or process that each sales designer must follow to ensure that what they are committing to is in your firm's best interest? As the owner, you are responsible for making sure the other people in your organization are not adversely affected by your lack of control over these processes.

Employing a specialized tool, such as Kitchen Manager, to help establish these processes, to collect key information in one easily accessible place and to keep tabs on these important commitments becomes a requirement, not a luxury.

Project Management
For too many sales designers and small business owners, project management is a completely reactive process. Big mistake! If you do not have a written plan for the proper management of such a complex task as a kitchen remodel, you will surely struggle at the very least, and fail at the very worst. Most importantly, your customers, tradespeople and suppliers will become aware of this omission, generating a negative impression of your firm.

Usually, sales designers are not good project managers. Their focus should be on design and sales.

As a business owner, it is your responsibility to your clients and everyone involved with your firm to ensure each project is done to the highest standards you have set for your firm and its image. If these standards are not met, the potential for a positive referral from this client is greatly compromised.

Thus, your initial investment, which originally brought them to your firm, is not maximized. Proper "planning" for this key function, whether you install kitchens or not, is critical to your firm's future.

Cost Analysis
Finally, you can easily identify a sales designer's shortcomings by examining your firm's gross profit margins. Do you know exactly where your margins shrink on a consistent basis for each sales designer? If you can identify each sales designer's margin tendencies, you can properly train them on how to correct these mistakes.

It is up to you, as the owner, to provide this training to your salespeople. They are so focused on the next projects that they don't take the time to review this key information once the job has been sold and the invoices start appearing.

Plus, if you provide this assistance to correct these issues, you can increase your net profit margin, the sales designers can make more income from their commission, and your other employees can have the added security and fringe benefits that a profitable firm brings.

Using software designed specifically for this purpose, like Kitchen Manager v3, to supplement your existing accounting software, will supply you with this vital information for your business.

In summary, drawing the proper "plans" for your firm in these five critical areas will create the composite blueprint for your firm's success based on facts, not fiction. Before you sell any more jobs that could go wrong, get trained on the tools available in our industry to plug those profit leaks. Then, gather and analyze the resulting information. You will be amazed at how quickly your bottom line improves.

Loading