Chasing Sales
It's been a while since I last did a business email, but I still meet people today that say they enjoyed the emails I did a few years back. So I thought I'd try and do some more.
In my business and I'm sure many like mine, Covid years were great (in business terms only!). Sales boomed and for 2 years the money flowed, records were set and all from the comfort of my armchair whilst I couldn't leave the house.
Then 2022 started. Everything is back to normal. But in my business, everyone who wanted to buy a piece of coffee equipment had done so during 2020-21. They didn't need more. They had everything! So sales started to decline, fast! Sales were generally down around 25%. Ouch! Luckily we hadn't gone big on inventory so we didn't have large sums of cash tied up on shelves in our warehouse. This is what caused a number of retailers to collapse in 2022 and probably more in 2023. Sales were great, they ordered loads of stock, then very quickly sales dried up and the stock didn't shift. The suppliers needed paying but they had no cash in the bank. Disaster!
So now we're into our second year of normal trading conditions, (ie non-Covid). But is it normal? 2022 was a year of low sales. 2023 could be the same but throw in higher interest rates and higher taxes in the UK. Could it be worse?! Possibly, well probably.
So it got me thinking, as we get back on the usual train of trying to grow sales. Bigger marketing budgets, bigger teams, more range of products, more inventory. When is enough, enough?
As I think about my emotions as we chase more sales, set targets for the year and report on them week to week. I feel stressed, anxious, worried, and disappointed if we don't hit weekly targets. But all we hear about in business circles is sales, sales, sales. And for small business owner-operators, this is stressful!
But what if we changed our thinking to I have enough? Every morning we wake up and say to ourselves, I have enough. I don't need any more, I don't need to chase sales. Whereas at the moment I and most business owners wake up thinking about how am I going to increase our sales, sometimes this is fun but mostly it's a drain.
I tried this for a month in February and it was amazing as I thought it would be. I was happier both professionally and personally. I didn't stress if we had a bad day or week of sales. I felt I had more time for myself.
Then I think back to the first 5 years of my business, when we didn't have marketing budgets or if we did it so small it was insignificant. We just relied on really great products, great customer service and word of mouth. The business still grew, albeit at a slower pace but more manageable and with less stress.
If I was to summarise the main points of having a stress-free business they would be:
- Have no debt. Debt is a spare tyre around your neck. And with Interest Rates going up, it's more stressful than ever. Use Profit First to rid yourself of debt.
- Hire a great assistant/operations manager/general manager. Whatever you want to call it, it's someone who can run the business day to day when you're not there. Take regular days off.
- Don't overspend on marketing. If you believe marketing books and Twitter you should be spending 10-25% of your revenue/sales on marketing. If you've spent money on marketing the last 6 months, try 6 months where you spend none. I think you will be surprised, especially if you have a great product/service, good customer support and spread the word by word of mouth and marketing methods with no cost (email, organic social etc)
- Micromanage your overheads. Every £1 saved in overheads is straight to profit. Let's say your Net profit is 10%. Sales for the year were £100, you made £10. Now you find £1 in saving in overhead. You now made £11 and your net profit is now 11%. But if you didn't save the overhead of £1, you would have to increase sales by 10% to achieve that increase in profit. What's easier, less stressful and cheaper? increasing sales by £10 or saving £1? Both have the same outcome!
Anyway, I hope this gives you some food for thought. Life is stressful enough, throw into the mix trying to grow a business, and that's next level. Maybe time to stop and think, enough is enough.
I remember this quote I read last year and started my thoughts about enough is enough. Enjoy!
At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history.
Heller responds,“Yes, but I have something he will never have — ENOUGH.”
I wish you every success in your business,
Paul - Owner of Coffee Hit