Welcome to the 2020 Vitalis #BusinessChallenge!
Last week we launched our 2020 #BusinessChallenge with a prize worth R28,000. We are happy for you to join anytime and grow your business to new heights.
This week we talk about step 2 in the STRATEGY theme. The steps in between. The detail. The decisions to be made. Or simply – THE HOW. Here we go!
So by now, you would have decided what it is you want to achieve in your business and you have these goals written down in detail.
Your 2020 goals could look something like this:
– Sales Goal 1: Increase the number of unit sales of Widget A from 13,945 units to 14,642 (5% increase) to increase turnover.
– Sales Goal 2: Increase the number of unit sales of Widget B from 2,873 to 3,103 (8% increase because a new market is identified and the demand should be higher) to increase turnover.
– Cost Goal 1: Decrease the cost of manufacturing Widget A with R3.00 per unit to increase the gross profit.
– Cost Goal 2: Contain marketing and distribution cost of Widget B to the current 12% of the sales price to ensure a stable gross profit. (remember that you are going to sell more of this unit as a result of the new market identified. This will inevitably increase the Rand value of the cost of marketing and distributing the Widget, but you can try and keep the % the same.)
– Production Goal 1: Reduce the production time of Widget A with 2 minutes to reduce manufacturing cost and increase gross profit.
– Production Goal 2: Reduce the production time of Widget B with 5 minutes to reduce manufacturing cost and increase gross profit.
– Production Goal 3: Install and commission the new Calibre5000 production machine for Widget A to improve the quality of the Widget.
– Inventory Goal: Reduce the inventory holding of Widget A with 400 units to unlock working capital currently stuck in inventory.
Ok, so my goals are written down, Tiaan. NOW, WHAT?!
Sir/Ma’am, the answer is quite simple. Do you have enough CAPS?
No, not the popular headgear, but rather C.A.P.S.?
The acronym refers to Capital, Assets, People and Skills. In order to ensure that you are able to execute on your goals, you need to be in possession of C.A.P.S.
Your business needs enough Capital to implement your goals where the implementation of the goal requires Capital. In the goals above, we want to buy the new Calibre5000. Thus, we need to ensure that we have either enough capital available to purchase this machine or we need to be able to obtain financing to purchase it.
Any business needs Assets to be able to perform its functions and make a profit. A lawyer needs a laptop, transport, law books and more to run their practice. A courier needs to have vehicles and a warehouse management system. These are all assets. Assets are needed everywhere above.
People. Need I say more? ALL businesses need people to operate the business as a business cannot operate itself. As much as we try and automate daily tasks, get robots to do mundane work or implement software, people are needed to execute most of the operations a business needs to perform. So, check that you have sufficient staff available to execute on your new goals. Staff are required at almost every single goal above.
Your staff lastly need the required Skills to execute on your goals. They need sales skills to achieve the Widget sales targets. Your production team will need very specific production skills to reduce the production time it takes to produce your Widgets. Your marketing team will need certain marketing skills to ensure that an increased level of marketing is performed for the same amount of money available to them.
You need to ensure that each goal you identified has access to sufficient resources (C.A.P.S.) to ensure that you can actually execute and then achieve this goal you identified. If it’s not possible, then you need to either adjust the goal or ensure that enough resources can be allocated to execute the specific goal.
Next week is week 3 and we will talk about resource allocation to gain maximum benefit and end off the STRATEGY theme.