by tradesmeninsights | Nov 3, 2010 | Uncategorized
A friend of mine, Abe WalkingBear, developer of a copyrighted profit system that focuses on improving cash flow, has agreed to share some of his insights (some are truly unique) on how manufacturers can help distributors. He’s written books, is an international speaker and co-authored STAFDA’s Foundations of Business 2007.
Old military funny money finds new life in business. During this time of slow sales and extended delays in business credit customers’ payments, an old idea is reborn.
During the Vietnam War, U.S troops and sailors in Asia were paid in funny money, i.e. MPC (military payment certificate). This funny money, which was also called “monopoly money” or “script,” was in use up until 1973. Members of the American military could convert MPCs to US dollars upon leaving a designated MPC zone, but while in these zones, all you could do with it was go to the Post Exchange (PX) or the Ship’s store and convert it to the local currency. MPC in Vietnam had pictures of movie stars on it and I can’t remember for sure, but I think that Marilyn Monroe was on the $20 bill.
Interesting, but what does this have to do with improved cash flow and more sales?
Distributors sometimes offer their business credit customers a 2-10-N30 payment term. i.e. the customer can take a 2% discount off the invoice amount if they pay it within 10 days, otherwise the full invoice amount is due in 30 days.
The idea behind the early pay discount being to spur cash flow.
Any business customer not taking advantage of a 2-10-N30 early pay discount fails to do so for one of two reasons:
1) they don’t have the financial ability to do so…no money
2) the sales and credit guys failed to explain that a 2-10-N30 is worth a 37.24% Annual Rate of Return…where else can you get 37.24% return with no risk?
Formula:
The Problem:
There are several problems with early pay discounts:
First, business customers sometimes will issue a check for payment on an invoice, less the 2%, on the the 10th day, but will not release the check until the 30th day or the 60th day thus defeating the very reason why the discount was offered in the first place.
Second, the taking of “unauthorized discounts” by the business customer by failing to pay within the 10 days creates additional work and cost for both the distributor and the business customer in the pursuit of the unearned discount. And this in turn can actually lead to the loss of customer good will and of future Sales.
I’ve never liked 2-10-N30 terms for these reasons.
The Best of MPCs and Early Pay Discounts
There is a way to use an early pay discount to improve cash flow and also bring business customers back to buy again thus gaining the most profitable sale, the repeat sale.
Instead of offering a 2-10-N30 term, a distributor can send out, along with an invoice, a VCDC; A Valued Customer Discount Certificate for 2% of the invoice amount…and they can put the selling company’s CEO’s picture or the selling salesperson’s picture on the certificate…or Marilyn Monroe’s picture.
Each VCDC would carry the same # as the invoice it applies to and thus would be easy to track.
The VCDC would clearly state that if the invoice that the VCDC applies to must be paid within 10 days of the invoice date for the customer to use the VCDC on their next purchase.
If a business customer pays within 15 days..they should be cut some slack and the VCDC accepted…on that next and most profitable purchase, the repeat.
The end result: Improved cash flow and repeat sales.
All too often in business we walk a mental rut, we do the same thing over and over again in the same way, until the rut becomes a mental trench and then we think we can see the horizon for oncoming danger or new business opportunities when in effect all we really see is a wall. And that’s not to say that a trench can’t be comfortable and easy to navigate, but God help you if things change and the walls give way.
During this time of slow sales and extended delays in business credit customers’ payments, manufacturers can add value to their distributors by sharing with them an old idea reborn anew on how to gain a competitve advantage while improving cash flow and repeat sales.
If you like this post, please share with your friends.
by tradesmeninsights | Oct 26, 2010 | Uncategorized
A friend of mine, Abe WalkingBear, developer of a copyrighted profit system that focuses on improving cash flow, has agreed to share some of his insights (some are truly unique) on how manufacturers can help distributors. He’s written books, is an international speaker and co-authored STAFDA’s Foundations of Business 2007.
Today, WalkingBear will talk about how efficiencies affects both profitability as well as competitive advantages. Enjoy.
Efficient…To be powerful in effect with little waste of effort.
When I first went into business consulting in 1982, the first thing I’d ask a new client for was their Operations Manual or written Policies and Procedures. I wanted to see what they had defined as “goals” and “methods” for achieving the “goals.” Many if not most were stunned, they got that “deer in the headlights look” and then they would start looking through desk drawers and cabinets.
28 years later little has changed, and if you have to look for your P&P, you don’t have any…at least not any usable ones.
Many if not most businesses operate on a “word of mouth basis,” the new guy learns from the old guy who learned from the dead guy. It’s a lot like the game kids play where they sit in a circle and the first kid whispers something in the next kid’s ear and so on. It’s real funny when kids do it, but “word of mouth” is not an efficient way to operate a business.
HH the Dalai Lama says that there are almost 7,000,000,000 of us and almost 7,000,000,000 versions of what is is. And if you are married or have kids, you know what the Dalai Lama is talking about. It’s not just Bill Clinton.
Word of mouth operations is not efficient and drives up the total cost of doing business for everyone in a supply chain…manufacturers, distributors and downline business customers all pay for any inefficiency in the supply chain; like strawberry jam, a little inefficiency spreads to everything it touches.
Studies have found that on average 25% of the total costs of doing business are directly tied to inefficiencies. When I speak to CEO and business owners’ groups, I put up a slide to this effect and every time I do, someone will say something like, “I wish it were only 25%.” 25% of the total cost of doing business is a whole bunch and most especially when it’s paid by everyone in a supply chain.
Twenty-five years ago I learned a great tool from my younger son who was then in the second grade. I learned how to use an organizational web to organize and document unique and specific knowledge. Based on this organizational web, I developed and copyrighted “The 5 Organizational Ps,” a set of methodologies for organizing and documenting the unique and specific knowledge found within every business so as to achieve new efficiencies and drive down the cost of doing business for everyone in their supply chain.
The Five Organizational Ps
Purpose: Every business function must have a clearly stated purpose which answers the question, “Why incur the costs that go with the function?”
Policies: Goal driven guidelines for each major component within the function.
Process: The step by step method for achieving the goals established by the policies.
People Requirements: The right people for the job based on the process.
Process Monitoring and Performance Measurements: Monitoring key steps in the process to ensure quality and measuring against the goals established by the policies.
If the established goals are not achieved, either the process is wrong or you have the wrong guy in the job.
In business, there’s a cascading effect to improvements. If a manufacturer, distributor or downline business customer can do something better, it lowers the total cost of doing business for all; a good business relationship at best is a partnership.
by tradesmeninsights | Sep 9, 2010 | Uncategorized
Sonnhalter recently completed a local tool drive for Habitat for Humanity for the Cleveland area. Thanks to everyone’s generous support, we received more than $16,000 in tools and building supplies.
“The Sonnhalter Tool Drive was a huge success! Their employees and clients contributed thousands of dollars worth of brand new or lightly used tools and materials,” said Frank Drahan, from the Greater Cleveland Habitat.
We’d like to thank the Berea Rotary and a few local distributors who collected tools for us. A special thanks to the manufacturers who stepped up and gave us donations: Arbortech, Council Tool, Knipex Tools, Madison Electric, Mid Continent Nail, Mr. Heater, Molex, RIDGID, Work Area Protection, Wright Tool.
by tradesmeninsights | Sep 1, 2010 | Marketing Tools, Traditional Marketing, Uncategorized
For those of you who are constantly trying to measure ROI on your Advertising/Marketing budgets, things fall short when you can’t say for sure what happened to all those leads you turned over to the sales force. We’re having a free webinar on September 14th at 2 PM EST and you can sign up here.
Here are some highlights:
- Most companies let new business opportunities slip through their fingers… and don’t know it!
- Recent studies found that some 80% of website visitor inquiries are ignored. Earlier studies found that 67% of inquirers are real prospects, yet 72% never hear from a salesperson.
- In this webinar, you will learn how to maximize the sales opportunities in every lead and maximize the return on your marketing investment.
- Learn how to follow-up on all leads quickly, affordably and effectively, how to improve follow-up effectiveness in the field, and how to implement easy-to-use tools to measure results.
by tradesmeninsights | Aug 10, 2010 | Uncategorized
For those of you who follow me, you know that I’m a big advocate of LinkedIn for the B-to-B market. You also know that I believe it’s one of the most under-utilized social media sites.
I recently read a post by Jason Falls, How to Make LinkedIn Answers Part of Your Routine, that showed me yet another way to generate both thought leadership and leads. Under the “More” button at the top of your home page is where you’ll find the Answers tab. There are several industry categories you can choose to follow. Since I use Google Reader, I subscribed to the appropriate categories and had them sent to my reader via an RSS feed. I also created a folder called LinkedIn Answers.
Then every morning as I check my reader, I quickly run through the Answers folder to see if there are any questions that I could contribute to. If so, I respond accordingly. I’ve only been doing this for a few weeks now, but it’s surprising the number of discussions I’ve been involved in that I would have missed if I hadn’t been using the Answer page.
I’m always learning new ways to take advantage of this powerful tool. Would you like to share ways you’re using LinkedIn?
If you like this post, please pass it onto a friend.
