John spent 40 years in the medical device field as an independent distributor for DePuy, A Johnson&Johnson company. After retiring in 2017 and taking a few years off, he was introduced to FocusCFO. He then joined the team in April 2021.
Successful in a variety of industries by building and leading teams to deliver on aggressive goals. Solid financial, operations and people skills honed from a number of C-level positions, primarily in family owned businesses.
A recent retail study by Accenture revealed that 24.4% of surveyed consumers felt that they frequently received too little attention, and nearly 10% of the respondents felt that they were frequently treated rudely in retail environments. According to that same survey, 89% to 95% of the responding consumers indicated that they were irritated by the actions of a retailer within their last four shopping experiences.
Although there is precious little dialogue about prospecting and planning a pipeline for retail firms, the premise of understanding consumer budgets, buying cycles, and individual needs are just as relevant as understanding the purchasing cycles of large, non-retail enterprise organizations. In big company or single shopper environments, it is equally important to understand the budgetary cycle of the client and to manage communications and operations accordingly.
In many small and medium-sized retail businesses, the concept of a sales pipeline is not often considered, whether they have brick and mortar stores or are non-store-based retailers (E-store, Online, TV, Direct Mail). This is primarily because retailing firms typically don’t have internal Business Development associates, Proposals, RFP (request for proposal) creations or submissions, SOWs (statement of work), or other short or long-term contracts to generate revenue that are the typical elements involved in the sales pipelines of other industries. A retailer’s revenue is derived from a single individual’s foot traffic, inbound phone call, and/or “left click.” This distinction, however, does not excuse the retailer from the necessity of understanding and managing their own, unique sales pipeline.
From the CFO’s perspective, the pipeline can be quantified and the metrics can be reported and managed. The key components of Retail Sales Revenue (RSR) can be broken down and quantified.
Three key elements of any retail enterprise – Merchandising, Store Operations and Marketing – work together to impact RSR.
Let’s take a brief look at each one individually:
Measuring trends in transaction counts is critical for any retailer. Even better is to measure foot traffic and then determine conversion rates of foot traffic to transactions. The marketing initiatives to increase foot traffic and transactions take many forms, and the key for the CFO is to understand the nature and timing of these initiatives and then correlate transaction data to those events.
Selling techniques of Store Associates are often overlooked as key elements of the retailer’s sales pipeline. In this case, maximizing Units Per Transaction (UPTs) can add significant retail revenue. The CFO can serve to provide actionable and concise information to Store Operations Management regarding specific UPT metrics and data.
The merchandising (or buying) group in the retail enterprise is charged with vast responsibilities. Among these is pricing, or the dollar value per unit at which the inventory will be sold to the public. Pricing considerations are many, and the importance of considering various sales pipeline metrics is paramount for optimal revenues, profitability, and cash flow.
Troubleshooting your system response time can be a laborious process, so enlisting the assistance of an expert to diagnose the problem will be an excellent investment. Once they identify the issues, you can develop a plan to improve your system performance that will balance your business issues with available technology so that your end result meets your short- and long-term company needs.
Consider this testimonial from a colleague:
“A retail sales client called us to ask if we could help him improve his company’s sales. He explained that sales revenue was not high enough, and that his staff needed training in closing sales, so that they could close more sales and therefore improve sales revenue.
When we spent some time with his staff, it became clear that there was nothing wrong with their ability to close sales. Instead, we found that staff was finding it difficult to start or carry on a conversation with a customer. Most potential customers were walking into the stores and then walking out again without really having an opportunity to talk about the products they wanted to buy.
By analyzing the sales pipeline and the particular points within the sales process where more customers were “leaking” from the pipeline, we were able to determine that the biggest problem staff had was not in closing sales, but in opening a dialogue with customers.
Once we established that, we ran some training courses and created training aids designed to assist staff in opening a sale and keeping a conversation going.
Year after year, the sales at each store showed increases of up to 20%.”
At a gross level, sales pipeline management is nothing more than estimating incoming cash flow. We look at our leads and prospects, make some estimates of the likelihood that they will eventually buy our products and services, and feed that information along with their expected spend into our projections to find out how much revenue we’re expecting to make.
But the real power of sales pipeline management becomes clear when we establish proper metrics and put processes in place to respond to changes in those metrics.
to productivity issues. System slowdowns or difficulty connecting to the network or the internet might mean that the network needs to be upgraded to handle the extra demand from additional employees.
Founded in 2001, FocusCFO is the leading onsite fractional CFO services provider in the Midwest and Southeast, with more than 100 CFOs and Area Presidents throughout Ohio, Indiana, Kentucky, Michigan, North Carolina Pennsylvania, South Carolina, West Virginia and Tennessee. FocusCFO works closely with small to medium sized businesses helping business owners gain control over three key financial and operational areas: increasing cash flow, reducing business risk, and creating a platform for scalable growth. This allows business owners to then realize full financial control and increased value in their businesses.
For more information, visit us at focuscfo.com or follow us on LinkedIn.
As a business owner, you have limited options when seeking capital to start or grow your company. Essentially, there are three sources of cash: your own cash investment or that of other investors, your bank, and cash from the daily operations of the company. The cash generated from the company’s operations is the least costly for the company, but in an effort to raise cash quickly, many business owners look to investor or private equity groups (PEG) without fully understanding the costs or effects of a private investment upon the company and themselves.
The decision will have a long-term impact on the business; therefore, you should explore all of your options and carefully examine the effects that those options will have on you, your company, and your employees.
As you enter into discussions to sell part of your company to raise cash, the value of your business will be the key issue, and your measure of value may be different than what the investor group determines it to be. The sweat equity that you have expended since starting the company and your emotional attachment to the company will have no value to the investor group. The investor will expect to receive a minimum return of 200% on their investment in 3 – 5 years at exit, and this expectation will factor into the valuation that they place on their equity in your company. When the value for the equity is established, the formula or basis used in determining the equity value should also be used as the basis for any future equity or the selling of equity. Valuation is a critical starting point in the capital raising process; if you and the investor cannot agree on the valuation then nothing else will matter. It is immensely important that you, as a business owner, seek professional help for these negotiations.
The new investor group will do Due Diligence on the company and the business owner/founder. Gathering the required information will be time consuming, in part because the requirements will include information that the company may not be preparing on a monthly basis. This information request will place additional stress on your staff, and if the company has not been keeping track of this information regularly, then it will also be important to do careful analysis to ensure the accuracy of the reports.
Then you must do Due Diligence on the investor group, which will also take time and resources, but it is absolutely crucial to know everything that you can about your new equity partner.
The new investor group may want to purchase a controlling share of your company. You may retain controlling ownership after the first capital infusion, but that control will probably change if additional capital is required during the ownership period of the investor group. That additional capital may be required if the company is operating to forecast but needs additional capital to take advantage of new business opportunities or if the company needs additional cash to meet short term cash flow deficiencies.
The investors will also require new, timely management reports so that they can monitor the performance and activities of the company. Again, this is a time-consuming process, and you must have adequately skilled staff to handle the reporting accurately and on a timely basis. Getting professional advice and assistance with negotiations will help to ensure that you have appropriate protections for your personal interests built into your agreement with the investor.
The investor group will want to exit the investment in 3 – 5 years. Do you want to buy your company back from the investor group and/or pass your company to other family members? If the answer is yes then your bank may be a source of cash to buy the equity at exit if the company is able to support the debt based on the operating cash flow.
If your goal is to sell your interest in the business along when the investor group exits, are you willing to stay with the company? The new investors may want you to stay during the transition period, or they may impose an earn-out on your share of the sale proceeds. This would require you to work with a new management team that will have new demands and expectations.
Before deciding to raise capital to grow your business, you need to make sure that the value that the investment will add is worth the effort and sacrifices that you will make. You also need be sure that your short-term goals, exit goals, and business values are aligned with those of the new Investor.
Lastly, you need to make sure that you have explored other sources of capital that could bring the same value that the investor will bring.
If you have never experienced the capital raising process before, it may seem overwhelming, and it will consume time that you would normally be spending on your daily business operations. A financial professional can help to ease that time burden, and will also ensure that you get maximum value from the investment with minimal risk.
Founded in 2001, FocusCFO is the leading onsite fractional CFO services provider in the Midwest and Southeast, with more than 100 CFOs and Area Presidents throughout Ohio, Michigan, Kentucky, Indiana, Pennsylvania, Tennessee, and North Carolina. FocusCFO works closely with small to medium sized businesses helping business owners gain control over three key financial and operational areas: increasing cash flow, reducing business risk, and creating a platform for scalable growth. This allows business owners to then realize full financial control and increased value in their businesses.
There are always signs that will tell you when you need to upgrade or replace a piece of equipment that you use in your business. In the case of a machine, key indicators include increased unplanned maintenance time, higher costs for replacement parts, or more time spent finding replacement parts due to the machine’s age.
A computer system offers similar indicators when it needs an update or replacement, and those indicators can appear in any component of the system. A computer system includes not only the individual computers; it comprises your network and associated equipment, printers, data storage devices, software, computer-controlled equipment, smart phones, and other communication or sales support devices.
There are typically four indicators that it is time to upgrade your computer system. If you see any or all of these indicators, it is time to develop a cost-effective road map to purchasing a system that will meet your company’s current and future needs. Your CFO can help you to do a cost benefit analysis and create your road map.
Example: Your old dot matrix printer jams, and you find that repairs will cost more than a new printer. You purchase the new printer, bring it back to the office, and find that it cannot be connected to your PC since it requires a USB cable and all you have is a parallel port.
New computer system capabilities and features are constantly being developed and made available to customers for all types and brands of computers. While the latest version of a system component may be attractive, if it is not compatible with the rest of your system, you will need to consider what additional components it requires.
Technology enhancements of most kinds are designed to improve efficiency, and efficiency can be a critical competitive advantage for your business.
If you have time to get a fresh cup of coffee every time you ask your PC to perform a task–update a document, perform a complex calculation in a spreadsheet, run a simple report– your system resources are probably inadequate. New applications with new functions and capabilities use a larger share of your system resources which causes slowdowns in your overall system.
Troubleshooting your system response time can be a laborious process, so enlisting the assistance of an expert to diagnose the problem will be an excellent investment. Once they identify the issues, you can develop a plan to improve your system performance that will balance your business issues with available technology so that your end result meets your short- and long-term company needs.
Security and the steps to maintain it remain a hot topic. Safeguarding your computer system should always be a high priority, and it is an increasingly critical part of protecting the interests of your company. The internet is being used more and more to manage your business–customer management, payroll, purchasing, tax planning, and so much more–and the risk of business interruptions from internet attacks is increasing as well.
Installing new software and hardware to manage your security might lead to problems or compatibility issues with other components. When this happens, you must choose whether to upgrade your system to accommodate the new security tools or do nothing and leave yourself exposed to attacks that could harm your business. Among all others, this may be the most important reason to invest in a system upgrade.
If your business has grown through increased sales, acquisitions, new employees, or if you have expanded or purchased new facilities, then you may feel the need for a computer system upgrade due
to productivity issues. System slowdowns or difficulty connecting to the network or the internet might mean that the network needs to be upgraded to handle the extra demand from additional employees.
If your business is faced with any of the indicators that we have discussed, then it is time to upgrade your computer system. Begin the process with a list of your requirements for information management and other applications and consult with an expert to validate your requirements as well as to understand which technology and which vendor makes sense for your particular business. Then you and your CFO should develop a plan for implementing the upgrade in the most cost-effective way that.
Founded in 2001, FocusCFO is the leading onsite fractional CFO services provider in the Midwest and Southeast, with more than 100 CFOs and Area Presidents throughout Ohio, Indiana, Kentucky, Michigan, North Carolina Pennsylvania, South Carolina, West Virginia and Tennessee. FocusCFO works closely with small to medium sized businesses helping business owners gain control over three key financial and operational areas: increasing cash flow, reducing business risk, and creating a platform for scalable growth. This allows business owners to then realize full financial control and increased value in their businesses.
For more information, visit us at focuscfo.com or follow us on LinkedIn.