OK, OK - I know, I am two episodes behind with my Apprentice blogging.... but seriously - the week before last just didn’t warrant the attention - so here is a Ketchup :-)
The task was to design and make a new condiment and then of course sell it. One team turned up at a high end food retail outlet without a product sample for them to try - and the other team where trying to take on Heinz with a fiery hot ketchup / sauce at about 4 times the price!
Despite the fact that the Boys (plus Katie) sold 305 bottles of the completely un-pourable sauce with a name spelled incorrectly (not that Paul or I noticed!) making £585 in Profit - it turns out that apparently, having more product to sell can make you more money! I know shocker - The Girls Team sold 607 jars of Chutney and handed over a Profit of £1028 to Lord Sugar - not bad!
The moral of this story however is something that the Mentors at the Business Wealth Club do teach a lot at their fortnightly Mentoring and Networking Meetings - and that is to know your numbers. The Boys lost because they mis-managed and lost control of their Production System - which in turn forced them to increase their Pricing structure. Paul’s PROFIT PIPELINE model demonstrates this perfectly. At the beginning of their Task they had a clear idea of expected material costs, production output and therefore expected profits. But bit by bit - throughout the day... profit seeped away in the guise of failed production, wasting both time and raw materials. A really worthwhile exercise to go through is to map out your product or service life cycle and see if there are any points along that pipe where you might be spilling profit.
Last week’s episode got Paul and I a bit more hot under the collar. It also had the best comedy line of the series so far... “Don’t look a gift House in the Eye” - I suppose Gift Horses can be easily spooked, or maybe they are just shy, but hay watch out for their eyes!
Anyway.... the task was to buy antique and second hand items (or should I say “tat”) and re-sell them. The two teams took very different approaches. One decided to buy fewer “quality” items and keep their shop clean (I would have described it as empty - but I guess I’m just not trendy enough to be shopping in London’s Brick Lane!), while the other team stacked their shop to the rafters and decided to “add value” to some of the stock by screwing legs to beautiful vintage suitcases and painting Union Flags (their words not mine!) onto anything they could. Now Paul and the Mentors would always say that to make money is to “add value” - but in this case, value was definately in the eye of the beholder, and it just didn’t hit the make for the stylish Brick Lane crowd.
But then - amongst all of the chaos, Paul began to notice some great ideas. Team Phoenix began to group items together to show a customer how things might be purchased and used together. “Finally” Paul screamed - “someone is using some common sense”, they were trying to cross sell and also they were using some Catalogue Management techniques that Paul would Mentor his Clients on. He Coaches them to package similar products together and have their ranges (and by ranges I mean your shop floor, your web site, your brochure or any other way that a prospect gets to peruse your wares...) make sense with each other, enabling you to Cross Sell and Up Sell throughout your offering.
The results were very polarised. Phoenix, who purchase only 50 items and kept a very tight rein on their spending, only parting with £360.10 - made a whopping profit of £1,063.40. Contrast that against Sterling who spent nearly double that at £660.76 - had over 200 items in their shop... profit? Only £783.49! This whole episode was summed up beautifully by Paul with one of his famous equations “Products x Promotion = Profits” So my question to you is....
Can your customers understand your Product offering? Are you reaching enough people and telling them often enough where you are and what you can do for them? And lastly... are you making enough Profit?
If you have to stop and think about any of these answers - why not find your closest Business Wealth Club Meeting and see if one of our Mentors can show you how to make this equation really add-up for you!
Sue Avins
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