It was serious business! My brothers and I were neck deep in it. We were digging to China when we were interrupted by the sound of our mother calling us for dinner.
Digging holes is something that boys do. As kids, we would dig holes for forts, holes for adventures, and holes in search of gold. At the age of three, my son dug a hole to trap bears.
In business however, when we dig holes – unless we are in the construction business – they are usually not good. I have dug myself some holes as a businessman over the years. The biggest hole that I dug was hundreds of thousands of dollars deep. These types of holes don’t happen overnight: they take lots of planning and many hours of making mistakes, and sometimes years to get out of.
The most common holes in business are profit holes. Profit holes are those costs that build up over time and eat away at the owner’s profits. According to the National Federation of Independent Business in the USA, 60 per cent of small businesses are either not profitable or are only marginally profitable. To be clear, the profit in a business is what is left over after paying all of your expenses. In a small business, there are many expenses: the cost of goods, labour, insurance, supplies, utilities, computer equipment, etc. The list is almost endless it seems. Unless we are careful operators of our business, we may find ourselves among the 60 per cent of businesses where the owners receive very little to speak of in terms of money at the end of the day.
One of my clients, we will call him Paul for the sake of this story, owned a health food store that he ran for several decades. As he was thinking of selling the business, he realized that new owners would probably like a business that was a little more profitable. Paul started examining his income and expense statement with a fine-tooth comb. He discovered several areas in which some of his costs had crept up over the year. In one case, he found that he had originally employed a cleaning company on a contract for a small job for $50 per week. Over time, they had gradually raised their prices to $100 per week. He consulted his employees concerning this job, and was told that they thought that they had time to do the contractor’s work as he was only spending 15 minutes a week in the building. Profit hole filled = $5,200!!!
Paul kept digging. One day he got a call from a service provider for debit machines. They told him that he would save $400 per month if he switched over. Paul didn’t switch, but he used that call to ask his current provider to match their rates. When they agreed, Paul saved an additional $4,800 being lost through a profit hole.
When Paul plugged these two profit holes, he saved himself $10,000 per year. For a small business owner, $10,000 a year can be very significant. Not only did Paul enjoy that money immediately, but he increased the value of his business at the same time. Potential buyers always want a profitable business!
When we are looking for ways to reduce our expenses and plug profit holes, we need to look through each and every area of the business. We must ask ourselves how we can reduce our costs in this area. In my book Profit Yourself Healthy, I identified 107 different ways that small business owners can reduce their expenses. These include reducing costs in areas such as labour, energy, consulting fees, insurance, travel expenses, maintenance, and more. Sometimes we can eliminate an expense. Often times by putting the product or service out for tender again, we can lower our costs. The trick is to look at the largest expense areas first, and figure out ways that we can create efficiencies.
The longer we have been in business, the more profit holes we can find. Like Paul, we let little expenses build up over time and the result is an erosion of our profits. It’s easy to dig holes but sometimes it’s much easier to fill them.
News, Views and Happenings in the world of Canadian Natural Health.
Editorial in this issue:
CHFA East Wrap-up
We'll be providing coverage of CHFA East, including new product launches, news and photos from the show and coverage of the CHFA award winners. We’ll have some photos from the fun we’ll be having at our booth. We’re holding a TIFF-themed event, including a red carpet, a photo wall, swag bags and mini-interviews with “the stars of the natural health industry” (the retailers!)
Follow-up with customers after CHFA East
When CHFA East is over, CNHR can help you follow-up and re-enforce all of your sales efforts at the show by blanketing your target audience from coast to coast.
I can explain all of the advertising, new product and editorial opportunities available to you to help you maximize your show expenditures and take your sales message out into the field. Remember: CNHR reaches all of the retailers who attended the show, plus the thousands who didn’t attend! Think of CNHR Magazine as your only sales person that gets into all health food stores from coast to coast, six times per year.
Book your 2020 ad plan with CNHR before December 1 and we’ll give you the 2019 ad rates, plus an extra Product Profile in both CHFA show issues. (Applies only to half-page ads and larger).
Congratulate the Brock Elliott Award winner
Congratulate the store that wins the prestigious Brock Elliott Memorial Award for Excellence in Retailing in print in CNHR. Your logo and congratulatory message (for only $450) appear on the page with other vendors, extending your best wishes to the winning store.
Ask me about our Product Profiles. They are super-effective and super-affordable. Regardless of your company size or advertising budget, you cannot beat the value of a Product Profile in CNHR. Reach thousands of key buyers in stores from coast to coast for only $450 per issue for pennies per reader!