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Planning Success for
Independent Business Owners

Fireplace Case

 

fireplace

CASE STUDY

Prior to our analysis, *The Fireplace Shop was a growing business with major growing pains.  Founded in 1998 out of the garage of the owners, Bob and Julie Smith, the business relocated in 2002 to a very high traffic area of their city.  The new store is very well appointed.   Sales growth has been excellent. 

Issues:

  • Owner burnout.

  • Not enough time out of the store to enjoy their family and outside interests.

  • No way to develop their people.

  • Owners’ opinion that growth has topped out since the amount of stress makes growth impossible.

  • Too owner-centered.

  • Violent peak period each year.  The volume done from September – December is as if the volume is 3 times what the annual volume is. 

    • The result is exhaustion on the part of Bob and Julie during this period.

    • The need exists for an alternate assortment strategy for non-peak periods. 

  • Administrative logistics are far behind and they can’t seem to get caught up.

  • No plans in place for employee usage such as installation technicians during non-peak times.

  • Had no budget, and did not understand how to calculate and control cash-flow.  They only had their tax return to review their financial performance.  They therefore suffered results with no opportunity to engineer better outcomes. 

Comments:

The potential of this business is tremendous.  Customers coming in the store do not get taken care of properly if the owners are busy working with other customers already in the store, they are out of the store on installations, or they are performing administrative tasks. 

Objective:

  • Create a management team to build a mission-driven, principle-based synergistic team where all departments function interdependently and all are aligned with a company mission.

  • Define everyone’s roles, tasks, and accountabilities.

  • Develop a communication tool to develop and maintain employees.

  • Clearly define the lines of communication.

  • Define the role of the sales manager.

  • Measure and track the critical aspects of sales.

  • Train the sales manager to maximize the return on each customer asset.

  • Define The Fireplace Shop's selling system.

  • Train the sales team in The Fireplace Shop's selling system.

  • Become a goal-driven company.

  • Eliminate price negotiation.

  • Institute more appropriate delivery and installation charges.

  • Eventually fire the owners from their roles as salespeople and replace them with well trained and accountable salespeople. 

  • Develop strong financial controls including an annual budget, a monthly profit and loss review process and cash-flow analysis.

JRM Solution:

  • Re-defined lines of communication.

  • Created a management team consisting of the owner, sales manager, office manager, and operations manager.

  • Developed a company mission statement for the  team.

  • Trained the management team to work as a synergistic, cohesive group that worked interdependently of one another.

  • Trained the team on how to have effective meetings.

  • Created job descriptions: defining everyone’s roles, responsibilities, tasks, and measurements.

  • Created job appraisals and trained how to effectively perform them.

  • Defined and implemented their company's selling system.

  • Set goals for sales and store performance.

  • Redefined compensation based upon sales performance.

  • Created a tracking system for sales performance and goal attainment.

  • Increased delivery charges and service fees.

  • Implemented a program to effectively sell extended warranties.

  • Created a procedure manual for the office.

  • Stopped price negotiation.

Projected Results

  • Quantifiable results:

    • Owner income increased by 55%

    • Profits increased 1.9 times

    • Total sales increased by 33%

    • Delivery and installation charges increased by 28.4%

    • Gross margin increased 3 points.

  • Re-energized the owners in their business.

  • Owners can take off when they want without negatively affecting the business.

  • Everyone in the company is on the same page.

  • Everyone understands their roles and responsibilities.

  • Created a team approach to decision-making and problem solving.

  • Accountability became the model.

  • Their employees are happier because they feel more important and their ideas are valuable.

  • A tool was developed to help the owner and sales manager manage results.

  • A tool was developed to help each salesperson attain their income goals.

  • A system was developed to train and continually develop the sales team.

  • Created a procedure manual for office tasks.

  • Everyone learned new skills.

*Simulated Case Study based on information received during the HPBA Convention.

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