Meeting Topic
Strategy by Shona Mookerjee
The Vero Centre in Auckland CBD has this quote on the wall – `we haven’t the money, so we’ve got to think’. Most of us have a plan; but do we have a strategy? And is there a difference?
I’m a self-employed, insurance adviser of nine years and these three fundamental principles work! I’ll explain them and leave you to make the application to your business.
- Interrogate the Numbers – I’m amazed at how many businesswomen don’t know their numbers. Numbers tell us about financial performance, the cost of overheads, and the amount of tax to pay; but what do they mean? Digging behind the numbers helps set strategy. E.g. where does my business really come from, what’s changing, and what isn’t working? In 2023, my business revenue fell 19%, thanks to a sharp drop in new client referrals. Hence, I grew my KiwiSaver business to compensate for lost revenue and targeted my customer base for new business. As a result, 37% of my 2024 revenue came from non-traditional channels and current customers. Interrogating the numbers can reveal new markets and future trends. My numbers are telling me, more people in their 60s need insurance because they’ll have mortgages to pay well after they retire. What are YOUR numbers telling you?
- Consider Your Positioning – Unique Selling Proposition and Competitive Advantage, are great buzzwords but the reality can be VERY hard to accomplish. Search Insurance Advisers and see – everyone has a website that extols their amazing customer service. Everyone can’t be # 1. How do you differentiate yourself? Answer – Positioning – occupying a UNIQUE position in your client’s mind. Mine is, Sh*t Happens Shona – it always gets a laugh, but it sticks! It’s smart. Where does rubber meet the road for an insurance client? During a claim! Once you know what your Position is, shout it from the treetops. Positioning helps you turn a disadvantage into a strength. Wrap your strategy around it. Remember, you can’t be everything to everyone. Pick one spot and occupy it.
- Establish Value – we know the price of something but not always it’s value. Price is a number, but VALUE – like beauty – is Perception. Giving your client information that is news to you but not to them, is spam. Generic emails are low value, and your client doesn’t care about the industry conference you attended. Information that your CLIENT values is currency. I use my networks to connect my clients with real estate agents, mortgage brokers, lawyers, accountants, photographers and travel agents. I help them reduce their ACC levies, sort out their vehicle insurance and get their wills done – and though none of these relate to my business, this creates opportunity. If, over time, you establish a clear value proposition for yourself with your client, you establish trust and become a source of value. It pays rich dividends in the long run.
Your plan for your business is your HOW; the strategy behind that is your WHY. Translating these three lessons into your business will go a long way towards sharpening your axe and bringing you success.
Next Meeting Topic
Credit Management by Bronwyn Gregory
Credit management plays a crucial role in maintaining a healthy cash flow and reducing financial risks for businesses. One effective strategy is to set up your invoice payment terms (due by dates) within a short time frame i.e. due on receipt or 7 days. Could using shorter payment terms and creating a process to manage your debtors make a difference in maintaining your business cash flow?
Why Shorter Payment Terms Work Better Than Longer Terms
Many larger businesses and corporations’ invoice with due dates and payment terms that are the 20th of the month. They in turn manage their debtors in the same way, often requiring invoices to be received and processed within 5-10 working days after the end of the month and making payments on the 20th. These longer timelines can disrupt cash flow for smaller businesses.
NZ Businesses are being encouraged to use shorter payment terms i.e. 7-days ensuring quick payments, promoting a steady cash flow and more predictable revenue. With this structure, businesses reduce the likelihood of late payments and avoid the stress and administration of pursuing overdue accounts. A faster cash cycle also means businesses can pay their debtors on time. Below are some tips for discussion to ensure your cashflow remains steady.
Clear Descriptions and Timely Invoicing
Issue invoices promptly and with accuracy. Delayed invoicing leads to delayed payments, which can destabilise cash flow. The sooner an invoice is sent, the sooner customers can process the payment. Invoices should include clear, detailed descriptions to avoid confusion and disputes. Customers should be able to understand the charges and services they are paying for. It is also important to clarify whether prices are inclusive or exclusive of GST. Transparent communication about pricing helps avoid misunderstandings and builds customer trust.
Transparent Communication: Make Sure Your Customers Understand Your Terms
Establishing clear and open communication with customers is key to fostering strong business relationships. It is essential to discuss payment terms, payment expectations and any additional fees or charges upfront. This ensures both parties agree on the payment schedule from the start. If customers face financial challenges, offering them an open line of communication helping maintain a positive relationship and avoid payment issues.
Build a Valuable Customer Base
Maintaining a successful business requires building a loyal and trustworthy customer base. You can achieve this by implementing best practices such as:
- Being Upfront About Charges: Clearly state all prices, including taxes and additional fees, so customers know exactly what to expect.
- Timely and Accurate Invoicing: Issue invoices promptly with clear descriptions to expedite payments.
- Clear Communication: Make sure customers fully understand your payment terms from the start. Don’t delay addressing any overdue debt, the longer you leave it the harder it gets, and it may be a simple communication error.
- Flexibility in Payment Terms: While using 7-day payment terms, offer flexibility if customers encounter genuine difficulties. This can foster long-term loyalty.
Conclusion Use best business practices to build a good business. If you want to chat, contact Bronwyn @ Synergy in Business for bookkeeping and payroll solutions.
Bronwyn Gregory (Synergy in Business Ltd)
