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How a part time finance director can help select profitable customers
 

How a part time finance director can help select profitable customers

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Not all customers are alike and financial analysis is required to avoid pitfalls. A part-time finance director puts this in reach of even small businesses. This example from the water cooler industry ...

Not all customers are alike and financial analysis is required to avoid pitfalls. A part-time finance director puts this in reach of even small businesses. This example from the water cooler industry shows that hidden costs can make the difference between a small but profitable customer and a large one that makes you no money. Local Business Partners provides part-time finance directors, part-time HR directors and part-time marketing directors to growing businesses wwho need high performing skills but want to access them flexibly and with low risk.

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    How a part time finance director can help select profitable customers How a part time finance director can help select profitable customers Presentation Transcript

    • How a part-time finance director can help you make better customer decisions Oli Randell Local Business Partners Manchester Choose your customers, don’t let your customers choose you The advantages of employing a part-time finance director are to do with sharing the risk, efficiency of investment and making significant improvements to profits. .
    • Part-Time Directors of Finance, HR & Marketing www.localbusinesspartners.co.uk
    • The Discipline of Market Leaders: - Choose your Customers - Narrow Your Focus - Dominate Your Market Treacy, Michael; Wiersema, Fred. 1995
    • Three Value Disciplines • Operational Excellence – Middle market, best price, least inconvenience – Dell – Easyjet – McDonald – Hertz - Toyota • Continuous Product Innovation – Best Product Period – Nike – Harley-Davidson – Swatch – Apple • Customer Intimacy – Cultivate Relationships & satisfy unique needs – No renowned examples
    • Successful companies know and choose which customers best fit their business based on financial analysis and disciplined application of activities
    • • The water cooler market – a clear example of how choosing customers can have a huge influence on profits. • Little product differentiation between suppliers • A universal product need means that the customer base ranges from multi-nationals to smallest SME A part-time Finance Director is completely focused on making best use of their time and adding value by concentrating on making changes that justify their contract, whether that is renegotiating significant contracts, analysing where cost and value efficiencies can be made or working with the business owner on strategic changes.
    • Finance – Revenue per Customer • Volume of Bottles • Price per bottle • Cooler Rental • Cooler Cleaning • Cups • Coffee, Teabags & Sugar 50% < €497 10% < €295 A part-time finance director is an efficient way to add valuable high performing skills into your business. Manchester based part-time finance director
    • Finance – Revenue per Customer • Volume of Bottles • Price per bottle • Cooler Rental • Cooler Cleaning • Cups • Coffee, Teabags & Sugar €569 A part-time finance director provides high performing insights efficiently and cost effectively enabling business owners to focus on operational issues
    • Finance – Direct Costs Manufacturing • Product Costs Distribution • Limiting Factor = Time – Distance from Depot – Density – Type of Building A part-time finance director provides high performing insights efficiently and cost effectively enabling business owners to focus on operational issues
    • Finance – Distance from Depot A part-time finance director provides high performing insights efficiently and cost effectively enabling business owners to focus on operational issues Distance to Depot (km) 0 50 100 150 200 1 21 41 61 81 101 121 141 162 182 204 241 301 Distance (km) NumberofDrops 50% > 58km 10% > 150km
    • Which Customer Costs 5x As Much to Service? A part-time finance director provides high performing insights efficiently and cost effectively enabling business owners to focus on operational issues A part-time finance director provides high performing insights efficiently and cost effectively enabling business owners to focus on operational issues A part-time finance director provides high performing insights efficiently and cost effectively enabling business owners to focus on operational issues A part-time finance director provides high performing insights efficiently and cost effectively enabling business owners to focus on operational issues A part-time finance director provides high performing insights efficiently and cost effectively enabling business owners to focus on operational issues
    • Cost to Service Each Customer £6.50 £11.36 £32.47
    • Finance – Same Type of Customer, Different Building Traditional hospital – long corridors Modern hospital – compact design A part-time finance director in Manchester will cost £100 per hour and you might need them for about 10 hours a week.
    • Finance – Indirect Customer Costs A part-time finance director will cost £100 per hour and you might need them for about 10 hours a week. Complexity of order process Customer interaction: volume and type
    • Design Your Customer Map • Revenue €497 per cooler • < 80km from Depot • Trucks = 140 Bottles • 35 Customers per Route A part-time finance director in Manchester will cost £100 per hour and you might need them for about 10 hours a week.
    • Designer Your Customer Site • No Entry Restrictions • Easy Delivery Access • Compact Location with high volume per drop • Pricing mechanism for non-standard A part-time finance director in Manchester will cost £100 per hour and you might need them for about 10 hours a week.
    • Financial Analysis of Administration • Clients with unique or unusual invoice requirements • Clients with special credit terms • Opportunity for Premium Service Offering – Last Minute Order Premium – Add-on services A part-time finance director in Manchester will cost £100 per hour and you might need them for about 10 hours a week.
    • Financial Analysis of Existing Customers Strategic Options • Client in Pyrenees Delivered from Montpellier • Local Delivery Partner? • Customer Swap With Rival?
    • Financial Analysis of Service Options Operational Options • Drop at the door • Delivery partner • Site Premium • Find an Alternate Supplier
    • Summary These examples from a market widely served by small and medium sized businesses show that a financial analysis of potential and existing customers can fundamentally affect the way a business operates and performs. A part-time finance director undertaking this kind of analysis can save the company significant sums and prevent the company from wasting precious resources in pursuing customers that would be expensive to service.
    • The Broader Benefits of a Part-Time Finance Director • The advantages of employing a part-time finance director are to do with sharing the risk, efficiency of investment and making significant improvements to profits. • A full-time finance director is likely to cost around £8,000 to £10,000 per month in salary, car, benefits, bonus, NI and other costs of employment. They may also have equity. • But how many business owners evaluate their performance on profit contribution or seek a step change in business performance? • Every FD in small and medium size business will tell you that their effective time each week gets eroded with dozens of tasks that have cost implications but need not end up on their desk. Everything from problems with the cleaners to leaky gutters somehow end up needing half an hour here, an hour there. • A part-time FD is completely focused on making best use of their time and adding value by concentrating on making changes that justify their contract, whether that is renegotiating significant contracts, analysing where cost and value efficiencies can be made or working with the business owner on strategic changes. • Our finance business partners all have one thing in common – they have a proven background in high performing and blue chip organisations and have gone on to work successfully for smaller businesses because they get satisfaction from getting stuck in and making a visible difference. • Above all, they buy in to our approach of sharing the risk with our clients. It is our way of demonstrating that we understand how business owners think and behave. We don’t want equity but we have ‘skin in the game’ because if you are not happy you can walk away and until that business partner is assigned to a new client, we are losing out. • Efficient, focused, and motivated by risk – is that a good enough reason to explore further the profiles of our finance business partners? Oli@localbp.co.uk 0161 871 4600
    • Part-Time Directors of Finance, HR & Marketing www.localbusinesspartners.co.uk