Business is rarely smooth sailing, and various problems are normal. Of course, in the commercial field, any problem can be solved technically, but the core is the cost of solving it. At the same time, before solving a problem, one must first understand the problem behind the problem or its core.
What is the ultimate goal of doing business? Simply put, it is to make money. How does money come about? There are only two directions: increasing revenue and reducing costs. Money earned through external operations is called increasing revenue, while money saved through internal management is called reducing costs. Of course, the main focus of current bosses is still on external operations, trying every means to increase revenue, such as expanding market areas, adding new products, enlarging company scale, increasing sales, etc., to make more money. As for internal management, or how to save money through internal management, it is often overlooked by bosses in the early stages. Internal management is simple and extensive, and at least the configuration and attention given to the back-office management departments are far less than those of the front-line business departments. The reason for not paying attention may be that the operational work is too busy to take care of, or the management structure was relatively simple and unnecessary, or the profits were too high to care about. Logically, there are two sources of making money in business: increasing revenue and reducing costs can both create profits, but most bosses believe that making money in business mainly relies on increasing revenue, while they give less consideration to how to achieve cost control and save money through reducing costs.
In the past, when the market space was large and business was good, focusing on increasing revenue was also correct. But now the market is sluggish, operational problems are many, business is hard, and increasing revenue is difficult. The profits created through increasing revenue are limited and starting to decline. At this time, don't keep your mind focused on increasing revenue; you need to turn to the other direction—reducing costs—and think of ways.
The goal of cost reduction is to control costs and save money. The money saved is also earned. Some bosses may think there is no place to save money, or that further saving will affect normal external operations. In fact, in the commercial field, there is infinite room for efficiency improvement; in other words, costs can also be infinitely saved. So, in which specific areas and through what work can cost control be achieved?
- Employee Skills What is the biggest cost of a company? Employees lacking professional skills. In most distributor companies, there is a lack of a systematic employee technical training system. They rely more on employees' own prior accumulation, or after joining the company, let old employees guide them, or even simpler, completely rely on employees to slowly accumulate in actual work.
Poor professional skills lead to low work efficiency, serious waste, and directly bring unnecessary cost increases. In the current market off-season, shouldn't we take this work seriously? Whether it's inviting professional teachers from outside to provide professional training, inviting salespeople from manufacturers to train, or having internal old employees share their experience, even buying some relevant technical books and CDs to distribute to employees. At the same time, taking advantage of the current market off-season with relatively more free time, consider increasing the frequency of internal training and technical training.
- Transparency in Internal Management After the company reaches a certain scale, departments, employees, and matters increase, and problems also increase simultaneously. Before solving problems, the relevant situations must first be made transparent. So-called transparency means fully displaying the current actual situation or existing problems, so that bosses and employees can see all situations and problems in work at a glance, and then provide directional guidance for the design of subsequent solutions. This is like going to the hospital for a check-up; first, you need a physical examination, which makes the entire body condition transparent, and then you can formulate a treatment plan based on that.
So, what situations need to be transparent?
The company's operating system
Current work plans
The actual progress of individual work
The actual progress of departments or specific projects
Current internal and external problems of the company
The storage of office documents and items
The actual storage and in-and-out situation of warehouse goods
The real technical level of employees
The operating standards and processes of current key business work
Customer resource status
Cleaning Up Work Standards and Processes How should each job be done? What are the execution standards? What is the promotion process? These situations should be clear and unified to ensure the efficiency of work execution. Of course, each job has standards for the employees involved, but these standards are self-determined by employees. The trouble is that the standards often differ among employees, which will inevitably lead to problems in management and command, difficulty in improving resource utilization, and even internal disputes.
Take advantage of the current market off-season to clean up the company's current work standards and unify them rigidly to avoid internal friction caused by inconsistent standards. Also, take this opportunity to clean up and clarify related work processes. Through internal discussion meetings, list the current actual processes, analyze and discuss them item by item based on actual implementation, and determine the process links and order.
- Cleaning Up Customer Resources Strictly speaking, there are no one-time customers. Even retail customers may return, and at least they have the value of word-of-mouth communication. Therefore, in the process of company development, there should be a system for accumulating and revitalizing customer resources. Whether it is downstream distribution customers, retail customers, or ordinary consumers, they all need to be recorded, organized, classified, and corresponding maintenance work arranged. Usually, when business is busy, there is not much time to clean up the customer resources accumulated over the years. Now that there is time, clean up the customer resources, classify them into different levels according to value, establish a membership system for consumers, arrange customer relationship maintenance for distribution and retail customers, and carry out maintenance and revitalization.
To make money in business, but the current market is off-season and increasing revenue is difficult, so we must quickly shift direction, improve efficiency in internal management, reduce internal friction, and thus achieve the purpose of saving money. The money saved is also earned. Some bosses may think that doing business still relies on making performance outside to earn money, and saving can only save a few dollars. In fact, extensive management inevitably leads to high internal management costs. Some distributors waste more money in internal management every year than they earn. That is to say, there is still a lot of room for cost control in the internal management of distributors, and if squeezed, a lot can be squeezed out. Furthermore, looking at many large international companies, their frequency of launching new products is not high, and their performance growth is also average. In fact, when the scale of an enterprise develops to a certain extent, increasing revenue is already difficult. The sustained stability and growth of profits often rely more on internal management and cost control. This is why the bigger the company, the stingier it becomes.
Although the title of this article is about how distributors in third- and fourth-tier markets survive in the off-season, in fact, no matter what level of distributor, and regardless of whether the current external market is prosperous or sluggish, they must maintain sufficient attention to internal management work, that is, cost reduction. Increasing revenue promotes company development and makes the company bigger; cost reduction ensures company stability and makes the company stronger.
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