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Small Business vs. Unlimited Guarantees

“Is the customer is always right”?

In reality, is the customer always right? No, not really. Many customers have taken advantage of that adage and have started using it to get something for nothing.

This mindset has occurred as corporations  have extended warrantees for longer terms and in some instances for a lifetime. The wording of such warrantees varies as to what constitutes a guarantee-able cause. Some are unconditional.

Why have companies made these promises to repair or replace their goods with such risk? Well, they either believe their products will last that long, they are desperate to compete on something other than price or they are playing the odds that most people will not return their purchases. All of these have associated costs that you pay for upon purchase.

What has gotten customers (a minority that is growing) to this point? Why are customers willing to lie to get “free stuff”? Retail clerks tell stories of products returned way past their guarantee expiration and with elevated tones decry the failure of the products until they have talked to higher ups and gotten what they want. Are their claims legit? Sometimes yes and sometimes no. They just know that if they scream loud enough they’ll get what they want.

With online and telephone (mail order) purchasing, it gets even worse. Without face to face contact on a return, theReturns line elevation of tone, the assertiveness of conversation and the “I won’t take no for an answer” speech can become
belligerent and often does. Lacking eye contact and the emotional connection of a personal conversation, the clerk on the other end of the line seems less human. Getting your way results in a freebie. The caller goes away swinging high fives while the clerk on the other end feels diminished, defeated and demoralized. After all, this is the company he works for, the products he believes in resulting in a desire for combat pay.

Big business created this practice

Companies have that right to offer any extended warrantees they wish. The do need to live up to them. They also need to spell them out completely. If a $10 billion company makes $800 million in profits, they can afford to risk a 7-9% return rate without affecting the bottom line much. They may get added business because of their warranty which will more than make up for the return rate. Returns may be resold at discounted prices if not damaged.

How can I as a small business compete?

Small businesses that resell products can live by their product manufacturers’ warrantees. If they provide an installation of the products, they should warranty the installation as well or declare in the terms that installation is not included. Some manufacturers offer some compensation for re-installation of their products at a pre-negotiated discounted rate if failure occurs. For large failures, say an entire commercial HVAC system, a negotiation with the manufacturer should be executed in order to not put a small business under financial duress.

Are customers ‘entitled’ to warranty freebies?

  • Customers returning products claiming failure, defective performance or damaged items are entitled to a replacement or repair per the warranty terms. If cash refunds are available, they should be spelled out in the terms. Many products are replacement or repair only.
  • Returns PolicyCustomer honesty is important. If the customer is lying about the performance of the product, they damaged the product themselves or misrepresented how they received the product, the conversations become ugly. Situations such as these need to be protected under the warranty terms and conditions.
  • Don’t offer cash back unless there is proof of purchase/receipt and the time elapsed is limited.  Most people don’t read warrantees until they need to use them, so make sure you’ve covered your company.
  • Do the math. What exactly is it costing to accept, say 8%, of sold products back? In your calculations, figure the labor, postage/trucking etc. as well. What handling will be needed afterwards to re-sell, re-condition, liquidate or dispose of the item? Whatever the average cost is, include it in the sale of the product after deducting the re-sale. If the cost is high, manage your warranty terms carefully.
  • In the case of service-only businesses, call-backs are costly. Sending a technician, installer, service person back to a customer has hidden costs. Not only is the employee time lost, the transportation costs (mileage, time), that tech’s billable time is lost, parts replacements and the lost confidence in your business’ ability to do the job right the first time is now questioned. Remember that customers talk and one bad experience gets shared many times over.

Returned sales cost small businesses thousands of dollars each year. If they aren’t accounted for ahead of time, they come off the bottom line. It is possible to protect yourself by planning ahead. Do the math and protect your profits.

Cash Flow – the lifeblood of your business.

SMALL BUSINESS SPECIAL

Is cash flowing through your company like a river? Comes in fast and goes out faster?

Are your expenses under control or are there too many hands in the pot?

Are you making the best use of your cash and line of credit?

Are you forever surprised at the end of the year over money you have left (or don’t have left)?

Here’s your chance to get your business organized at the halfway point of 2017. Start off on the right foot with a cash flow projection that shows you real numbers that you can run your company and lowering your stress level by taking action six weeks before your cash and expenses become unbalanced. Always be prepared.

Call us today, get 8 hours consultation on a business channel, department or overall company process you need help on and you’ll get a free cash flow analysis that will help you finish 2017 with a real time view of the cash flowing through your company.

Create opportunities for adjusting prices.

Enable your ability to set money aside.

Pay bills on time.

Pay down that line of credit.

Know when to buy that new equipment.

Take advantage of discounted buying opportunities.

Don’t wait until its too late, call or email us today.

5 Strategies to Get Through Election Week

CS_Dist_Sales

And Beyond

The moment we’ve all been waiting for is here. Have you been saying, “If we can get through this election, we’ll be able to __________.” Fill in the blanks.

This is not a forecast of things to come, but rather a thoughtful look at the controls you can prepare for as a result of things not in your control.

Wait no more…

  1. Strategy – stop waiting to see what will happen. You have more control over your business’ success and direction than you think you have. Successful companies are just that because they develop strategies around current climates. Take the time to look at a high elevation view of your company. What are its strengths? Weaknesses? List them, study them and engage your managers and other employees to help resolve the profit eating bugs.
  2. Strategy – Research potential outcomes. Read trusted news sources that are least bias about election outcomes. Listen to candidates, most are pretty transparent when it comes to honesty. Find a source that delivers facts. That is not as easy as it sounds. Sometimes you have to read multiple sources from opposing viewpoints and deduce your own conclusions. The key is to take the time to digest such information and align it with your own goals, beliefs and moral compass. Then take action.
  3. Strategy – Spend some time with trusted advisors about what potential strategies you could take basedhappy-customer-dog-licking-face on different scenarios. Prepare your company around possible “if…then” scenarios. If you have managers, get their input. Throw some ‘what ifs’ at them. Write down the responses for your review later. ‘If, then’ scenarios force you to look at potential outcomes of elections and will drive recoveries for your business should they be needed.
  4. Strategy – Reduce the “what if’s to “thens”. Draw your worst case scenarios and what you would need to do to keep your business thriving, or at least surviving. (I recommend thriving). If the anticipated outcome is for an increase in business, then develop your best case scenarios and write your strategies for growth. In the case of an election, you may end up with multiples of one or the other. Start with the worst case and work your way down the list. Don’t leave any possibilities. No one likes to lay people off because of a downturn in business. But the potential outcome of not doing could eventually lay everyone off. Better a few than all.
  5. Strategy – After the election, pay attention to the business climate. Watch your production, billings and financials daily, weekly at the most. Talk with other business owners and leaders and get a feel for the general mood. Avoid knee jerk reactions but rather try to temper your actions over time. Be flexible and enlist your employees help in making things happen for the benefit of the company. Chances are, if you’re scared, they are too. If you’re positive, they’ll follow. Stay the part of the leader. Show your ability to keep things moving in the right direction.

While the mood after an election can be good or bad, your ability to stay ahead of the curve will greatly enhance the success of your business. Your main goal after the election is to stay positive, hopeful and communicate with your staff to give them confidence.

You may not be able to control the general economy, but you can be ready to make course corrections along the way because you thought about it ahead of time.

What is your chief strategy for the post-election economy?

 

Leading Edge Business Strategies, LLC is a consulting firm for small business. Paul Beaudette is the President and has over 30 years of successful business experience managing companies to sustainable profits and leading employees to greater productivity.

“Leadership is a potent combination of strategy and character.”  -General Norman Schwarzkokpf

 

The Power of a Mentor

Every business owner/president/general manager should have a mentor. If you think that as an owner you know it all, you’re wrong. You may be successful up to this point, but you will get to the point where you’re faced with decisions that could take you either way.

Here are 4 reasons to find a mentor:

  1. You need someone to tell it to you like it is. As an entrepreneur, mentor1you live in a bubble of your own thoughts. Your thoughts are a result of what you read, the conversations you have with others, things you may have seen on TV, etc. Someone in the past has influenced you into the way you think today. With a mentor, you need to find someone that will tell it to you straight, someone who does not have a vested interest in your business or your anticipated reaction.
  2. You need someone who thinks differently than you do. If you’re in the tire sales and service business, you may have been doing newspaper or print advertising, perhaps even TV advertising. Find someone who can deliver new ideas to you from outside the tire service business. Perhaps another entrepreneur or a business coach who can deliver new ideas on promotion, dealing with customers, scheduling customers or whatever.
  3. You’re not looking for a friend. A friend has a vested interest in your feelings. That doesn’t mean you’re looking for someone who is rude or heartless. You just need someone who doesn’t mind disagreeing with you and telling you why. Someone you’ve never known before but knows something about business, usually works out better.
  4. Confidant – if you have confidential matters to talk over with someone outside your business or executive team, find a mentor whom you can talk to on a confidential basis. Business owners don’t always have someone to share their inner most thoughts and feelings with. Finding a confidant can be extremely stress relieving.

Vivek Wadhwa quote

Developing a relationship with a mentor is a sign of strength in an entrepreneur. Take care of yourself so you can take care of others. Mental alertness, comfort and acuity is key to operating a business. Whether you pay for a business coach who works in confidentiality or find someone you trust, make the move to ensure your success.

Paul Beaudette is an independent business coach with Leading Edge Business Strategies. His focus is on growing small businesses to better compete against national and global corporations.

Don’t just Survive, THRIVE !

Leadership from Gratitude

Not Management by Ego

by Paul Beaudette

The presidential candidates, Republican or Democrat, have all demonstrated one thing in common. An oversized ego is prevalent when you run for president.

After all, what are you selling? YOU! You are selling yourself to the people of the United States. How you go about it determines how much of a narcissist you are. We have seen extreme levels of narcissism, ego-centricity, pomposity and vanity, and these came from one candidate.

In business, managers, leaders and office holders often have the ego-driven need to attain such a position and then bask in the glory of “I’m in charge”. To a new manager, what may have formerly been co-workers, are now employees and the responsibility of this new manager. The transition has to be handled carefully and responsibly to maintain a working relationship, yet achieve the level of respect and allegiance that the manager seeks from the employee and vice versa.

egomaniac

Strong manager egos often displace the actual message being transmitted. Your title isn’t your role, your role is your title.

If the manager’s ego takes over, the relationship becomes one of title, not role. Too often, you’ll see people promoted to positions that they are not trained for because they are family, or a friend of the big boss and feel they are ‘owed’ that position. The damage potential that this has to the workers will begin to trickle down to customers and diminish customer loyalty. Employees begin feeling used, threatened and hurt. Turnover increases and the constant flow of new people begins to affect the bottom line. Morale is destroyed and theft and misuse of company property appears. Customers vanish.

How do you keep this from happening? Here are some suggestions:

  1. Hire right. Don’t take your hiring process for granted. It’s not filling in vacant positions with bodies. Look at it from a standpoint of the customer. The customer wants a friendly personality, someone who can answer product/service/process questions and someone who can be expedient and accurate.
    1. When there is no direct contact with the customer, use the same scenario as in #1, but change the customer to a co-worker, team leader or anyone else within the company.
    2. Depending on the position being filled, you may choose to have a personality survey performed. These give you the traits of the applicant against the traits you are looking for. They provide a good indicator if a match is possible. They are also useful after hire to coach the employee to success.
  2. For Pete’s sake, don’t promote people just because they are related or a friend. Promote them because they are leaders or have the potential to become leaders. Whenever you want to fill a leadership position, interview the candidates (including internal candidates) and ask them the tough questions. Find out how they have handled stress in the past, what examples they have of conflict they have encountered in the past and what they did about it. Those experiential answers will go a long way in your decision.
  3. When the candidate’s questions revolve only around pay, company car, benefits and such; question whether they are only looking at status versus the interests of your business. Ask why the position is important to them. Question how they would change an unproductive behavior in an employee. How would they handle an irate customer with a legitimate complaint?
  4. Get a fellow team member to interview the candidate. They know what it takes to do the job and can ask pertinent questions.
  5. The ideal candidate will be someone who will do the job because he/she wants to be a part of a better business. This person will want the customers to better themselves through the interaction with your company. They will be happier, feel good and be personally productive within their own business. The manager (leader) you are looking for is someone who is personally grateful for having improved the lives of employees or customers. Their primary goal is not make themselves look better and boost their ego. It is to serve others.

The fifth concept is not common in business. In fact, it’s rare. But the end product is a person who is rewarded for having created an outstanding team of employees and extremely satisfied customers. Steven Covey would always say, “Start with then end in mind”. Well, here it is. The customer is the end and if you work your way backwards from there, you’ll find that this personality type creates the environment and attitude you need to succeed.

Paul Beaudette is a business coach and consultant. With over 30 years of ‘boots on the ground’ experience, he has made businesses successful through his leadership, controlled management style and financial acumen. “Don’t just survive, Thrive”

Leading Edge Business Strategies