CPBJ Article - Is your business ready for mobile applications?

1. Right now many businesses are
starting to gather information needed
to create budgets
for 2016. Here
are a few things I
think every busi-
ness should do as
part of that pro-
cess.
Start by doing
research on your
key customers. I
mean the 20 per-
cent of customers
who make up 80 percent of sales.
How are they doing? Talk to their
purchasing people. If you have the
relationships, talk with their leaders.
Are they having a good year? What do
they expect 2016 to bring? If they are
public companies, go to their web-
sites and read the forecasts they give
to stock analysts.
If all of that fails, take a hard look
at your customers’ industries. Are the
industries they are in thriving, or are
they failing? For example, low-priced
oil is great for automakers, but it is
terrible for drilling equipment suppli-
ers. Find out all you can about your
customers’ prospects before budget-
ing sales for next year.
When you do budget sales, be
careful. There are five things you
want to consider.
The first is true volume. How
much will sales increase or decrease,
at current pricing levels, based on
the changing demand of your exist-
ing customer base? Add to that the
change due to expanding the number
of customers using existing products
or services through sales initiatives.
Next, consider the effect of mix.
By mix I mean the relative volume
of sales of your different products or
services. For example, do you expect
to sell more of an expensive product
and less of an inexpensive one next
year? If so, sales will go up, although
the capacity you need to produce
higher sales may not. It is important
to segregate sales changes due to mix
from pure volume changes because
of this difference in how they affect
your capacity needs.
Third, consider price. If you in-
crease prices, sales will increase,
even if unit volumes remain the
same. It is really important to under-
stand that. Some managers look at
an increased sales number and start
using it and prior year sales as a ratio
to determine all manner of costs.
If sales are going up we must need
more labor, right? In this case that’s
wrong. You must understand where
the increases come from. Increases
due to price have no effect on labor
or any other cost.
Fourth, consider sales of new
products or services. If you are
launching something new, how much
do you want to commit to it in your
budget? You may want to be conser-
vative about that, but be careful. New
products and services do take extra
resources to produce. And they often
can have large startup costs. So if you
are going to budget those costs, you
can’t be overly conservative on the
sales revenue. No matter how conser-
vative your sales projection, you must
budget the costs of the launch.
Finally, look back at sales in 2015
and ask if there were any large one-
time sales or projects that won’t
repeat in 2016. If so, be very careful
in budgeting next year’s sales by in-
crementing the sales in 2015 by some
percentage. A large project that won’t
repeat can make your next budget
unrealistic.
The cost side requires similar
analysis. With a good understanding
of changes in volume and mix, and
the contribution of new products and
services, you can determine which
direct and indirect costs will be af-
fected. Pay special attention to the
indirect costs. Those are the ones that
are often missed when a business is
growing. Think beyond the people
who make the product or deliver
the service. Will your sales growth
require more sales people, more
recruiting manpower in HR or more
R&D staffing?
Having a good breakdown of sales
changes will facilitate that thought
process on the cost side and should
help you get a more accurate picture
of your needs.
When the annual budget is com-
pleted, you can start to break it down
by month. If you increase prices in
January, when will that actually affect
sales? When will new product sales
start? Be as precise as you can.
Don’t make the mistake I see so
often of taking an annual number
and dividing by twelve to get monthly
budgets. That is terribly wrong for
three reasons.
First, when you have price in-
creases and new product or service
launches, it just doesn’t work that
way. They ramp up over time from
the point of launch. Second, that as-
sumes there is zero seasonality in
your business, which is almost never
true. Third, it ignores the fact that the
months don’t all have the same num-
ber of production or shipping days.
It takes a little more thought to
consider the effects of volume, price,
mix and new products on revenues
and costs, but it will ground your
budget in reality.
•
Richard Randall is founder and presi-
dent of management-consulting firm New
Level Advisors in Springettsbury Township,
York County. Email him at info@newlevel
advisors.com.
November 20, 2015 Central Penn Business Journal www.CPBJ.com 25
THE WHITEBOARD
Finding the reality in your 2016 corporate budget
Richard
Randall
VIEWS
As a modern business leader, you
know that mobile applications are
making a mas-
sive impact on
corporate culture
and enterprise op-
erations in general.
Some even say that
mobile technology
has become a re-
quirement for suc-
cess in the modern
era.
The question
is, does your busi-
ness truly need mobile solutions, and
how should you approach this process
if you decide it’s time to take action?
You’ll soon discover that the process is
a bit more involved than you may have
thought.
Here is a basic guide to help you
map out a strategy when the time is
right.
Do you really need a mobile app?
Before you open the company check-
book, you need to determine if de-
veloping a mobile application makes
good business sense. Your business is
unique. A one-size-fits-all approach
for an app may not fit your business
goals. Maybe a Web app would be
more appropriate than a mobile app.
A more strategic approach is es-
sential. Here is where planning, con-
sultation and expert guidance make
all the difference, helping you create
the ultimate mobile solution for your
business.
Map out a plan. The best mobile
strategies start from the ground up,
meaning that they are developed with
a clear end in mind: reaching custom-
ers and improving process efficiency.
While a retailer may benefit from a
mobile inventory tracking system, a
sales team could gain an edge using
custom-built CRM software on the go.
It’s up to you, the business leader,
to identify the issues at hand and
determine how a mobile application
can help lead your organization to a
more efficient and profitable status.
This requires you to pinpoint the ap-
plication’s must-have features and ca-
pabilities first, such as email or social
login, geolocation, camera integration,
offline capability, map integration, so-
cial sharing and push notifications.
More workers demand mobile
apps. Are you prepared to deliver?
Ask yourself exactly what it is you want
to accomplish with your mobile apps,
and work with internal team members
to account for every aspect of the busi-
ness. Bringing in external consulting
personnel can also accelerate and
streamline this process, helping you
to shed light on sources of inefficiency
within your operations and create a
plan that addresses these shortcom-
ings in a targeted way.
Execute with precision. Once you
know the type of mobile application
your business really needs, it’s time
to get to work on development and
deployment. Of course, this is easier
said than done, which is why bringing
on a team of expert developers is the
smartest move you can make. The best
third-party app creators will under-
stand the exact needs and expectations
you bring to the table, and develop the
solution accordingly.
An external development team will
also account for elements of mobile
strategy that you may overlook, such
as compatibility with both Apple iOS
and Google Android operating sys-
tems. According to GigaOM, Kantar
Worldpanel research revealed that iOS
and Android device sales were neck
and neck this past year, meaning that
your workforce will likely be relying on
both platforms. Universal app func-
tionality is key.
With these ideas in mind - and a
team of development experts by your
side — you’ll have everything you need
to achieve next-level mobile success.
•
Amanda Dolan is a manager in
Weidenhammer’s Solution Delivery Division
and has 15 years of experience in appli-
cation development projects that solve
complex business challenges. She leads
Weidenhammer’s mobile and PHP applica-
tion development practices.
Is your business ready for mobile applications?
Amanda Dolan
manager in
Weidenhammer’s
Solution Delivery
Division
Joel Berg is editor of the Central
Penn Business
Journal. Born in
Philadelphia, raised
in Northern Virginia
and now living in
York, he’s a gradu-
ate of Franklin &
Marshall College and the University
of Maryland. Have a question or story
idea? Email him at joelb@cpbj.com.
Follow him on Twitter, @JoelBYorkPa.
Fast Forward is posted on Sundays
at www.CPBJ.com to give you a
jump on the week ahead. Here’s an
excerpt:
When Hess Corp. unveiled 10
shopping malls where it would sell
its distinctive toy trucks this holi-
day season, it was hard to miss
the midstate connection.
Just look at a map. Nine of
the malls are clustered around
New York City and Philadelphia.
Hanging out to the west, all by
itself, there’s Capital City Mall in
Lower Allen Township.
I had to know how Capital City
made the cut, so I tracked down
the general manager of the Hess
Toy Truck unit of Hess Corp., Justin
Mayer. I reached him Thursday,
as he was traveling to oversee
the start of sales at mall kiosks.
Online sales had begun Nov. 1.
I was hoping for a serendipi-
tous tale of corporate synergy. Or
perhaps I would hear how a fear-
some wizard of big data had cut
through a fog of numbers to reveal
that Harrisburg is a hot zone of
Hess truck sales. Take that, Harry
Potter.
The answer, alas, was more
prosaic. The Harrisburg area was
among the regions served by Hess
gas stations, Mayer said. After the
stations were sold, Hess wanted
to re-establish a bricks-and-mortar
outlet for its toy trucks. A new ver-
sion comes out every holiday sea-
son, and they typically sell out.
“It’s a really important tradi-
tion for our customers, and it’s a
really important tradition for Hess,
and it’s one we want to continue,”
Mayer said.
I pressed for details on how the
malls were picked, whether other
malls were considered, whether
Hess had looked at other retail
venues, what the financial terms of
the arrangement were. But it was
clear I wasn’t going to get any-
where and that Mayer had a lot of
ground to cover.
“We’re very happy with where
we are,” Mayer said. ...
—Nov. 15
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