The Ripples managing director, Paul Crow, insists that if businesses want to survive the aftermath of Brexit they need to take a long, hard look at themselves and their practices to make sure they’re as efficient as possible
My headmaster at primary school once told me that the world was going to run out of oil soon. I didn’t sleep that night, worried about how my dad was going to get to work.
When I stare at the headlines forecasting a financial post-Brexit Armageddon, I have to ask myself, is this really the issue?
There are going to be some bumps in the road ahead and it is more a question of how large and far apart they are, rather than whether they are coming or not. And yes, some are going to hurt. We are presented with continuous uncertainty as everyone waits to find out what the impact is and the obvious consequences for suppliers of increased costs and how they deal with it.
Rather than adopt the brace position, I recommend we learn from the car industry and simply work out how to be more efficient and create new opportunities from within to make ourselves more appealing than other choices consumers have to spend their money on. We must make ourselves relevant to our customer.
My recommendation is to do what we are doing and undertake a good old-fashioned SWOT – strengths, weaknesses, opportunities and threats – review so that you can evaluate your current strategy, where you need to be and where you could end up if you do nothing.
Calling yourself a specialist trader was sufficient in the past to have a clear identity. But there is no such level playing field now. Businesses vary enormously in size, products, price points, geographical reach, marketing, margin and sales volumes. Knowing where you fit, and want to fit, requires a clear identity and an even clearer vision of how to maintain this identity.
I know this sounds all very textbook and makes me look like one of those ego-driven LinkedIn ‘influencers’, but a business needs to have a DNA that extends beyond the personality of the owner. You need total clarity on what type of customer you are targeting, what products you will sell them, the price point, the systems and methods you will be using and even the type of employees you do or don’t need to achieve these goals.
At Ripples, we think we have a pretty clear identity, but we are constantly reviewing whether it is the right one.
Rather than adopt the brace position, I recommend we learn from the car industry and simply work out how to be more efficient and create new opportunities
You also need to ensure you build a defensive strategy around protecting it, too. You will need money in the bank and to hold on to your cash for as long as possible.
You need to undertake a detailed examination of what you are selling, margins, the number of items being sold and frankly whether it is worth bothering with certain areas of your business at all. I’ve heard of very large bathroom retailers doing significant volumes with suppliers and being treated well as a result – rightly so. But ultimately, the supplier is often the biggest benefaciary in these arrangements and they need and use this business to subsidise the smaller account that does a fraction of the business. If you are the 20 in their 80:20 sales split, it is time for you to renegotiate – and negotiate hard.
Sure, they will be nervous of giving up more margin at a time when their own costs are uncertain. But, equally, they could afford to drop you, so don’t negotiate on a win-lose basis, unless you are genuinely prepared to walk away.
I have no idea if the way I approach these meetings is the best way. But, it works for me. I have never left a meeting with an improved trading agreement, where I haven’t had to demonstrate commitment to the supplier and offer evidence that we can grow or maintain sales.
I study and research their activity, their strengths, challenges and what they are trying to achieve, how and with whom. I then work out how I can help them achieve this through our own company in return for a better package for our franchisees.
It is not unusual for me to show information about our business that others would consider confidential, so that they can understand your own challenges and opportunities.
I learned the benefit of looking at your saturation point from a kitchen retailer called Ryan whom we invited to our conference. His approach is to look at the saturation point of each individual salesperson and identify, based on averages, the maximum number of sales they could realistically achieve. It is often way more than is actually being achieved.
Challenging the status quo is not popular, but it is necessary to understand these saturation points to identify the action required to maximise sales. If you haven’t got enough opportunities and don’t think you can get them, you might have more staff than you need.
Realistically, I would suggest those opportunities do exist because the companies that are being the most proactive are the ones who are still growing sales.
We should all be aware of the supplier who one day, frustrated at their lack of sales development, decides to sell direct.
So I wasn’t surprised when a leading brand asked me recently whether they thought the customer would buy direct from them. Why they would want to let me know their thinking I have no idea, but I warn you now that while I do not expect this to be the norm, I do expect things to change rapidly in our industry over the next 10 years as brands within it fight to be noticed.