- Courtesy of Drugwatch.com
It is your responsibility to know the times and the seasons
of your company’s sales cycle. Especially when it has a seasonal sales decline. You alone are responsible for knowing when business is going to be good when it’s not going to be good, then how many employees to put on staff for the day or not to. As a manager I spent hundreds if not thousands of hours trying to control the amount of labor cost that was going on in that particular business at that particular time.
Back when I was demoted at Xpert Tune I spent about a year
trying to learn technically what was going on and what caused it to happen, what was the effect and could I predict it again or make it happen again? It was in during that time I discovered something that I had seen for the third year in a
row and was able to finally figure out what caused it.
Every year about the last week of February business would be down for a week or two and it puzzled me. Then one day a customer came to pay his bill with a credit card and the credit card was declined. This was back in the mid-80s and technology has changed however at that time occasionally when the card was declined a message would scroll across the screen of the credit card processing machine that said call this toll-free number. Well since this gentleman’s card was declined and I had that message so I picked up the phone and called the number thinking that maybe they would authorize the transaction, instead the gentleman asked if the customer was standing there, and if I had the credit card in my hand? I replied yes that I did have it, and he asked me to cut it in half and mail it to them for a reward. Well this really put me in an awkward spot with the customer and I told the customer what they told me to
do and although disappointed he said he understood.
Well what had transpired was that his credit card was way the over the limit and he was being behind on his payments. Well this got me to thinking and I realized something the last
week of February is approximately 60 days after Christmas. This was the week that credit card companies were saying pay up or lose the card. What this told me was that many customers had to forgo spending money on repairs and other bills because they had to make a last-minute payment on a credit card. There is a term called “Unperformed Maintenance” which refers to what happens when cash gets really tight. People put off repairs and maintenance during these times.
I am sure if you study your business you will learn trends in your sales cycle for example while at Roto-Rooter I learned that in the spring the leaves grow and the roots stop growing, and in the fall while the leaves are falling the tree goes dormant and the roots grow. This explained why the drain cleaning business is very busy in the fall and very slow in the spring. Again I say it is your responsibility to know the times and the seasons of your company’s sales cycle so that you can plan your cash flow and your labor costs in advance.
Another little thought that I would throw in here is that remember four times a year you have a five-week month and during this period you have an opportunity to increase your bottom line profit because your fixed costs stay the same but you have an extra week of sales. So remember to really watch costs and really go all out when it comes to sales during that fifth week because it will add to the bottom line at a much higher percentage of dollars
than your normal month.