Ironing Out PEAKS and TROUGHS - 2008 Style
Summer trade was pretty good, according to the majority of retailers and hoteliers and that augers well for 2008. It’s been good that the eastern states at least have had a lengthy warmer late summer and early autumn to make up for the wet January! As part of a program to re-visit earlier topics based in part on interest from retailers and hoteliers, I thought we could delve again, as I did a few years ago, into some key sales boosting concepts.
It’s interesting to note that our summer trade was something that we always relied upon to get ourselves back on track. Yet, these days, we have seen a distinct flattening of our sales graph. Does this mean that we haven’t reached our peaks of yesteryear? Whilst some businesses would answer yes, in general, as an industry, the answer is no. This is because we have also ironed out the troughs, those poorer trading periods where doom and gloom oftened set in!
What are some of the issues faced by retailers and hoteliers who have an old ‘traditional’ peaks and troughs sales pattern? Poor rostering and ensuing high labour cost, usually represented as a % of sales, would be the first. This would also apply to other variable costs to business (some taxes, some utilities like electricity etc, advertising costs and of course, brown paper bags!)
Businesses being run by wages percentages will always appear poorly run during these poor sales periods as there is only so much wages reduction can take place! In fact, often wages are reduced too much thereby reducing any business’s ability to actually make the sales! Many businesses have found, over time, that solely reducing the wages bill can actually increase the wages percentage by not allowing yourself and the staff team to cover all potential sales and to create any new ones through upselling, cross-selling etc.
The days of large annual payments are long gone, or are they? Whilst so many of our business expenses can now be paid in monthly or quarterly instalments, there may still be some large one-off payments that still have to be made. Remember the days, long gone now, of licence fee twice a year and annual insurance payments (usually as we celebrated our anniversary in business!)? Now its GST for those who don‘t plan properly and get caught every quarter or month. Let’s face it; cash flow should not be the problem it once was.
How to iron out those peaks and troughs? Have a think about a concerted marketing program, which is aimed at boosting quieter periods. Many businesses have made the mistake of trying to promote themselves when they have already reached a quiet period, i.e. at the wrong time in the cycle. It’s best promoting before the top of the cycle to allow for the lag time in getting the tills ringing. It’s actually the hardest thing to do because you’re flat out putting money in the till!
I always tell clients that it is best not to talk about the ‘end of summer’ or the ‘end of solid trading’. It will become a self-fulfilling prophecy, no doubt about it! One trick is to extend your strong sales periods by focussing on an event, one that you would put on during strong trading periods, that you place on your calendar 3 to 4 weeks after the slow down. You’ll often find stronger sales will continue to that point!
The ability to see the potential troughs and minimise their impact is a skill that not all small business operators have and that few have the time to adequately assess but one that must be part of our business skill ‘armoury’.
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