With the popularity of American pastimes growing rapidly in the UK – beginning with their candy-fuelled Halloween and excitement for the ‘holiday season’ – we approach a bargain-hunters dream this weekend, a sales push brought over from across the pond – Black Friday and Cyber Monday.

During November 2017 £1.6bn was spent every week online in the UK.

So should our beloved businesses take the plunge and participate in the sales fest?

Selling products at a discount may please new and existing customers, increasing their purchases, but make sure you’re aware of the cost to YOU the business owner.

Risk factors
One risk factor from discounting heavily for Black Friday and Cyber Monday sales is that you potentially pull forward sales at a much lower margin than you would’ve achieved had you kept your pricing stable.

Market share gain from a temporary steal from your competitors may be obtained but is it worth it in the long run?

You’re likely to also have increased expenses to your business too, paying for extra staff, overtime and the extra distribution bills for delivery of products/services which increases the cost of sale at a time when you’re already generating a lower margin due to the discounts you offer. You may not be left with much profit.

Finally, a higher volume of sales can also affect cash flow – you’ll likely need higher stock levels for selling more products, and/or encounter capacity issues dealing with the demands of Black Friday and Cyber Monday.

This discounting period will also be followed by a few weeks and possibly months of lower sales due to bringing sales forward.

Also be aware of the trend with returns. I know some of the big retailers now have huge challenges dealing with the amount of products returned due to buying habits, (order three, keep one then send two back).

So make sure you know your numbers!
We all want to increase turnover, but not to the detriment of the bottom line.

So what is the most profitable way to achieve further sales?

Not everyone buys on price. In many cases, the customer makes key decisions if the seller understands and fulfils their needs; allows ease of access to the product/service and delivers a professional high-quality service.

Unless you have the finances and scale to be able to compete on price you need to focus on how you differentiate from your competitors.

Don’t ruin the effort you’ve put into recruiting the best staff, investing in their development, investing in continued service delivery improvements and sales and marketing strategies, only to reduce your prices to match the competition.

It’s easy to get caught up in the euphoria of discount sales campaigns, but it tends not to be sustainable in the long run.

So, what should you pay attention to?

  • Of the products or services you offer – which of these generate the highest gross margin?
  • Determine your target market – by size, sectors, and demographics and to the prospects and customers that would obtain value from owning your products or using your services.
  • Also those customers that value your products and services are likely to be better payers and less hassle too!

Chase margin rather than turnover. Focus on marketing and putting sales effort into building relationships, improving communication and customer service to increase sales and market penetration to your target prospects and customers with the objective of selling more of those products and services with high margins.

What would you rather have? A £5 million turnover business making £200,000, or a £1 million business making £250,000?

Which business would be easier to manage and control? And which business would you enjoy to work in and have the pleasure of owning?

We can all be busy fools, so remember:

Turnover is vanity, profit is sanity and cash is reality

If you are buying this weekend it’s worth looking into the deals out there, particularly on electrical items and technology and potentially bagging some bargains.

However don’t get caught up in the hype as it can be very addictive buying online too.

Always check as some of the deals are not necessarily what they seem!

Money saving expert – Black Friday deals

If you want to know more,

We are running a couple of short breakfast seminars on how to get your business working for you.

Wednesday November 28 , 8.30am–10.30am, The Trout Hotel, Cockermouth.

Further information and booking link

Thursday December 6, 8.30am–10.30am, Crown & Mitre, Carlisle

Further information and booking link

These seminars are suitable for business owners who are:

  • Frustrated that business growth goals haven’t materialised during 2018
  • Disappointed that profit hasn’t improved this year
  • Have concerns about setting 2019 targets and what 2019 may bring you
  • Anxious about predicting sales and how to cover business costs in 2019

If you are looking to grow your business, Business Doctors Cumbria offer a free business health check where we can help you to set a clear vision and understand the steps you need to take to fulfil your aspirations.

Contact us for more information on 07966 686 112 or email peterfleming@businessdoctors.co.uk

You can also visit our website here