What is a Consultant?

A consultant is a professional who sells expertise in a specific area (or areas) to clients, providing them with assessments on their practices, helping them identify problems and solutions, and advising them on possible courses of action. Consultants act most commonly as advisers, but they may also be employed to address any other type of situation where their specific experience and knowledge is required. For instance, a consultant could be asked to implement his or her recommendations, provide training sessions on his or her area of expertise, take part in the planning of a corporation's strategy, design promotional material, evaluate bookkeeping methods, etc.

In fact, there is no sphere of activity that is exclusive to consultants or any sphere of activity from which they are expressly excluded. From branding and marketing programs and services to designing new packages, they are a cost-effective alternative for operations that have not yet reached a point where they need to hire a full-time employee but do need periodic expert assistance.

Consultants can work:

• for large consulting firms;
• for boutique firms (i.e. small specialized firms);
• as independent contractors;
• as contractors working within an organization where some form of employer/employee relationship already exists (this depends on the statutes and regulations of the organization, as well as its needs).

Consultants are normally employed on a contractual basis; however, within some firms, consultants may be hired on a permanent basis until their engagement is over. Afterwards, they are made available to hiring firms. Within small consulting firms, it is more likely consultants will be hired as contractors, and their employment will be terminated when the project ends. The same applies to independent contractors.

Your Consultancy is a Business

If you want to establish yourself as an independent contractor or a contractor working within an organization where some form of employer/employee relationship already exists, it is important to remember that owning your own consulting business is precisely that, owning a business. This means you will need to go through the same start-up processes that any other entrepreneur must go through: business registration, acquiring a business number, dealing with business taxes, etc.

Planning Your Business

What is a Business Plan?

A business plan is a recognized management tool used by successful and/or prospective businesses of all sizes to document business objectives and to propose how these objectives will be attained within a specific period of time. It is a written document, which describes who you are, what you plan to achieve, where your business will be located, when you expect to get under way, and how you will overcome the risks involved and provide the returns anticipated.

Why Do I Need One?

A business plan will provide information of your proposed venture to lenders, investors, and suppliers to demonstrate how you plan to use their money, and to establish a basis for credibility of your project. This plan will serve as a guide to the various areas that you as a manager will be concerned with. As you work through this plan, adapt it to your own particular needs.

For further information:
see the document: Business Plan Guide

Interactive Business Planner (IBP)

The IBP is a computer software program that uses the capabilities of the Internet to assist you in preparing a 3-year business plan for a new or existing business. The IBP will help you write your business plan, provide a format for writing your business plan, and take the information you enter and prepare financial projections for you.

For further information:
visit the web site:Interactive Business Planner
see the document: Interactive Business Planner (IBP)

3. Regulations

Knowing the rules and the regulations that apply to your area of expertise is necessary. The amount of regulations that you need to know depends, as might be expected, on your field of activity. Also, keep in mind that some projects may require you learn about rules and regulations you do not already know something about. Keep up to date on amendments to legislations that affect your business.

Business Regulations Info-Guide

This document will assist you in navigating federal, provincial and municipal regulations that apply to a number of industries and businesses in Ontario.

For further information:
see the document Business Regulations Info-Guide

4. Financing

The Canada-Ontario Business Service Centre has created documents, which provide an overview of some of the main financing options for individuals starting and operating a business in Ontario, including programs offered or supported by the government.

• Financing for Starting a Business Info-Guide
• Financing for Established Businesses Info-Guide

5. Managing Your Operation

Dealing with Business Taxes

All businesses must be aware of the various taxes that may apply to their product or service. Depending on the type and location of products or services being offered, federal, provincial and/or municipal business taxes may apply.

For further information:
see the document: Taxation Info-Guide

Insurance

Insurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, consider asking other business owners in your area to recommend one.

The following list is included to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with your insurance agent.

Basic insurance:

• fire insurance (extended coverage on buildings and contents);
• liability insurance;
• burglary protection (theft coverage);
• dishonesty insurance (covers thefts by employees).

Insurance needs naturally vary from one consultancy to the other, depending on your field of activity. It is best to choose an insurance agent or broker that is familiar with your field of expertise. As a consultant, liability coverage will be vital.

Note: Your professional association may have information about insurance packages specifically tailored for your needs. It is best, however, to discuss your specific requirements with your insurance agent.

Marketing/Advertising

Word-of-mouth advertising and good public relations are often the best ways of promoting your business. Depending on your market and its size, also consider flyers, business cards, brochures, newspapers (especially for holiday promotions), radio, TV, the phone book and the Internet. Also bear in mind that a satisfied customer is good advertising. Referrals are also a valuable way of making customers aware of your products or services.

A web site is also a good marketing tool. It should have details to describe the location (your address, telephone and fax numbers, and directions on how to get to your establishment), hours of operation, services offered, credentials and anything else you think may be of interest to potential customers. However, once you launch a web site, you should update it on a regular basis.

Participating in community events is another way of advertising your business. You may also hold events that will promote your business. No matter how you choose to market your business, it is wise to track how your clients became aware of your establishment - this may help determine your future advertising strategies.

For further information:
visit the web site:Preparing a Marketing Plan
see these documents:
Guidelines for Developing a Company Brochure
Signs and your Business
Plan your Advertising Budget
Advertising Do's and Don'ts
Ways to Promote Your Product or Service
Marketing Plan Outline

Online Small Business Workshop - The Marketing Basics section covers the basics from developing your customer profile to promoting your business.

The federal Competition Act governs misleading advertising and deceptive marketing practices for most businesses in Canada. The Act defines which marketing practices are illegal and the process of complaint investigation.

For further information:
visit the web site:Competition Bureau
see the document: Competition Act - Misleading Advertising and Deceptive Marketing Practices

Market Research

Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your customers and competitors is a critical first step in market investigation and development of a marketing plan.

In developing a marketing plan, your primary functions are to understand the needs and desires of your customer, select or develop a product or service that will meet customer needs, develop promotional material, and ensure that the product or service can be provided effectively at a profit.

For further information:
see the document: Market Research for Your Business

Contracts and Proposals

Consulting contracts may vary widely in their format and their length, depending on the nature and the complexity of the project. There are standard articles to include in written contracts: the name and the location of the parties involved, the date the contract is signed, an offer, an acceptance of the offer, consideration (i.e. the benefit accruing to the parties), signatures of the parties, etc. A written contract helps to avoid misunderstandings, to outline the terms of payment and to protect you in case of disagreements with your client on the nature of the assignment. If you do not possess the legal expertise to draft legal contracts that include all mandatory provisions, you should seek advice from a lawyer.

For further information:
see the document: Selecting Professional Services

The Office of Small and Medium Enterprises

The Office of Small and Medium Enterprises provides two types of support for those SMEs wishing to do business with the government. The Office assists SMEs as they navigate the government procurement system and is working within the government to ensure the procurement system treats SMEs fairly.

For further information:
visit the web site:Office of Small and Medium Enterprises

Clients and Proposals

Virtually all sectors of business call upon the expertise of consultants, so don't be too restrictive. Your clientele may consist of organizations from both the public, the private and the non-profit sectors. To identify consulting opportunities, look for advertisements on websites, in newspapers, magazines and trade journals.

Public Sector

Governments are important clients for consultants. Most contracts are from solicited proposals, but you can submit an unsolicited proposal and try to get the contract directly, or you can sub-contract with other companies who have been awarded the contract. When seeking consultancy opportunities with governments, make sure you look through electronic tendering services. The Ontario Government uses MERX, while the Federal Government uses MERX and Business Access Canada.

MERX - The Electronic Tendering Service

MERX is an Internet-based electronic tendering system that advertises government contracting opportunities to potential bidders across Canada.

For further information:
visit the web site:MERX
see the document: MERX: Electronic Tendering Service

Business Access Canada

Business Access Canada is an inter-departmental initiative to improve supplier and buyer awareness and simplify access to federal government purchasing information.

For further information:
visit the web site:Business Access Canada
see the document Business Access Canada

Procurement

Selling to the Ontario Government means supplying a large marketplace. Businesses of all sizes and types can be successful vendors to the government.

The Management Board Secretariat, Procurement Policy and IT Procurement Branch (PPITPB) is responsible for the development of the government's procurement policy framework, the preparation of requests for proposals and negotiating and managing government-wide contracts for information and information technology.

PPITPB online

PPITPB online provides strategic procurement advice, training and services to government ministries and agencies and supports supplier development and the ongoing implementation of Ontario's interprovincial trade agreements.

For further information:
visit the web site:PPITPB Online

Ontario Opportunities

In the Procurement Opportunities section of its web site, the Procurement Policy and IT Procurement Branch lists other public sector organizations' calls for proposals sites and other electronic tendering services.

MARCAN

MARCAN is a window to tender notices for procurement opportunities within the Canadian public sector.

For further information:
visit the web site:MARCAN

bidsCanada.com

bidsCanada.com helps you sell to the Canadian public sector by providing free e-mail notification and search capabilities of the most recent business opportunities including Tenders, Requests for Proposal, Requests for Quotation and other contracts.

For further information:
visit the web site:bidsCanada.com

Proposals

Whether you are responding to a call for proposals from the public, the private or the non-profit sector, there will be selection procedures to follow. These procedures will vary from one organization to the next, so gather all the required information before submitting your proposal. The following are a number of areas you should be aware of when pursuing a contract for service. The appropriate professional services, such as legal counsel should also be sought out and utilized.

Site: Where the work is to be done? What size of area? What type of work?	Insurance: General liability insurance coverage! Amount?
Contact: Ensure you have a contact to clarify and discuss services with.	Contract time: When do you start and when is the contract over?
Qualifications: What methods are used to determine your qualifications and/or your employees?	Subcontractors: Note - be sure you are aware of supplementary conditions or specifications relating to subcontractors.
Examination of contract documents and site: It is up to you to examine documents and visit the site.	Omissions: If you think some term or condition is missing or there is a discrepancy, bring it to the attention of the owner.
Federal, Provincial and Municipal laws: It is important that you understand and comply with them in the performance of the work.	Addenda: Before submitting your tender prior to the closing, check to see if any changes have been made to the tender.
Bond: What size ($) and type of bond is required?

Selecting Professional Services

The use of professional services is essential to the success of a small business. Professionals can provide knowledge and expertise in the areas where you may have little. They can round out your management team to ensure your business is operating efficiently.

Professional services often used by entrepreneurs may include:

• lawyer:
• insurance broker;
• accountant;
• banker (for tips on dealing with your bank, see the document Dealing With Your Banker & Other Lenders).

For further information:
see the document: Selecting Professional Services

Accounting/Bookkeeping

A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis.

For further information:
see the document: Basic Bookkeeping

Setting-Up a Pay System

Pay administration is a management tool that enables you to control personnel cost, increase employee morale, and reduce workforce turnover.

For further information:
see the document: Setting Up a Pay System

Setting the Right Price

Setting the right price can influence what consumers will buy, which in turn affects total revenue and profit. In the end, the right price for the product/service is the price that the consumer is willing to pay for it. Hence, correct pricing decisions are a key to successful management.

For further information:
see the document: Setting the Right Price

Profit Watching

Making a profit is the most important -- some might say the only objective of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits, you must raise revenues, lower expenses, or both. To make improvements, you must know what's really going on financially at all times.

For further information:
see the document: Checklist for Profit Watching

Fees

Consultants work for a fee. Pricing of their services will influence consumers and consequently the total revenue of their consultancy. In the end, the right price for the services of a consultant is the price that the consumer is willing to pay. For this reason, correct pricing decisions are a key to success.

For further information:
see the document: Profit Pricing for the Costing of a Service

As a consultant, there are many ways to set your fees: by the hour, by the day or by assignment. When you are quoting, make sure you include in your fee not only the cost of your labor, but also your daily overhead for the duration of the project, the indirect and direct expenses you will incur, as well as a profit margin. You want to build in your fee enough money to cover the operating costs of your business and the time you spent on marketing your services, maintaining your skills and administration.

Do not bill clients exclusively on the basis of the time spent delivering your services. From your clients' perspective, you are an authority on a subject matter that is important to their operation; set your fees accordingly. However, when setting your fees, make sure you find the right balance between overcharging and undercharging: your business must be profitable, but your fees should not be scaring clients away. Research what your competition is charging to see if you are asking for too much or not enough.

Many factors influence the worth of your services. When setting your fees, take into consideration the following:

• rarity - knowing how rare knowledge is drives the value higher. Keep in mind though, that once your knowledge has been shared or sold to someone else, the value begins to dilute.
• accuracy and dependability - if the information/solutions that you are selling have consistently been accurate and measured to be of substantial value, you can charge more because the risk is less for buyers.
• market rate - in some cases the buying markets have already defined the going rate through supply and demand. For example, seasonable high demand may cause you to increase your rates; conversely, during low demand periods you may reduce rates to keep cash flow coming.
• initial rates - having already determined what your competition is charging, you may alter your rates to reflect your newness in the market. You are in essence trading rate for reputation. You need completed projects to gain credibility and presence in the marketplace. Being cost competitive may give you an edge in gaining those first few contacts.
• predetermined price - a defined project may have a fee or stipend already outlined.
• cost plus - determine what your costs are, including external expenses and overhead; multiply that amount by the percentage of profit you wish to make. That percentage may be used on the industry average.*

*This paragraph adapted from How to be a Consultant, Canada-Manitoba Business Service Centre, Western Regional Office, Manitoba Industry, Trade and Mines.

For an example of a basic proposal for tender, see the document Basic Proposal for Tender.

6. Associations

Association of Independent Consultants (AIC)

The Association of Independent Consultants (AIC) helps potential clients find specialists, experts and contractors in many fields. The AIC holds educational networking meetings, workshops, and their website has articles on consulting, a discussion board and a searchable database of consultants.

For futher information:
please call 416-410-8163
visit the web site:Association of Independent Consultants

Association of International Consultants (AIC)

Association of International Consultants (AIC) provides companies and international institutions with highly qualified experts for assignments of varying length on short notice.

For further information:
visit the web site:Association International Consultants

Canadian Federation of Independent Business (CFIB)

CFIB represents more than 100 000 owners of small and medium-sized businesses, distributed across all industry sectors and all regions of Canada. CFIB's advocacy is based on the strong feedback it receives from its members, and it has a high profile in government, in business and among the general public.

For further information:
visit the web site:Canadian Federation of Independent Business
see the document: Canadian Federation of Independent Business

7. Other Resources

Industry Canada

Labour Market Information

Statistics Canada

Business Information by Industrial Sector

Canadian Association of Management Consultants

Need more information?

Click: Canada-Ontario Business Service Centre
Call: 1-888-576-4444
Visit: visit our Regional Access Program Locations page to locate an office near you

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Some of the organizations listed above are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages.

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Related Reading

• Business Guides

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

!0+2 Requirements

Understanding 10+2 Requirements By Deborah Catalano Ruriani The Customs and Border Protection (CBP) agency's Importer Security Filing (ISF) regulation has become commonly known as the 10+2 initiative because it requires importers and vessel-operating carriers to provide trade data (10 elements and two elements each, respectively) for non-bulk cargo shipments arriving into the United States via ocean. Melissa Irmen, vice president, products and strategy, at Charlotte, N.C.-based trade solutions provider Integration Point, offers these tips for complying with the new regulations.
1.		Remember that 10+2 pertains to goods transiting through the United States, not just imports. Carriers must file data for goods moving through the country for export and for freight remaining on board the vessel.
2.		Be aware of the "flexible enforcement" loophole. CBP will not assess liquidated damages for failure to meet the new requirements until Jan. 26, 2010. In the interim, the agency expects importers to make a good faith effort to comply.
3.		Understand who is responsible for filing the data. The ISF importer bears responsibility for ensuring all 10 data elements are filed correctly, even if the information originates from another trading partner.
4.		Engage your carriers. Carriers must file the container's status message and stow plan. You do not have to tie these elements to the importer data; CBP will make that correlation.
5.		Don't wait until the last minute. Filings must be submitted 24 hours prior to the shipment's arrival in a U.S. port, or upon lading at a foreign port that is less than a 24-hour voyage to the closest U.S. port. To prevent delays, you can send ISFs in advance, even without the two most difficult to obtain data elements -- container stuffing location and consolidator -- as long as you provide these two remaining elements 24 hours prior to arrival.
6.		Know what data can be amended. "Flexibility in interpretation" was introduced for data elements that cause the most concern for compliance, such as country of origin, ship-to party, and manufacturer. You can submit an initial response based on the best available data 24 hours prior to lading, but you must ensure that CBP receives the final data on time.
7.		Learn how to file electronically, or engage a partner to do it for you. All ISF filings must be submitted via the Automated Manifest System (AMS) or the Automated Broker Interface (ABI). You may be a self-filer or you can choose to use an agent. If you don't have electronic submission capability, you'll need to engage a partner to handle it.
8.		Transition now toward electronic filing. Some importers are meeting the 10+2 requirements with manual data entry using commercially available documents. This allows you to test each channel in the supply chain while the electronic data integration is being built.
9.		Know the penalties for compliance failure. The fine for failure to meet ISF requirements was reduced from the value of the shipment to $5,000 per shipment. However, the statement of what constitutes a violation -- such as a misreported shipment or incorrectly stated line items on a filing -- has not been issued yet.
10.		Get help. Consult the CBP Web site (www.cbp.gov/xp/cgov/trade/cargo_security/carriers/security_filing/) for the most current information on the 10+2 regulations.

Refrigerated Transportation

Refrigerated Transport: Really Remote Control

Poultry distributor Simmons Foods is clucking over its remote monitoring solution that helps prevent costly spoiled food loads.

by Dan Calabrese

A truckload of refrigerated and frozen chicken travels from factory to warehouse. The trip takes only a few hours, and the truck arrives at the warehouse at the scheduled time.

SO FAR, SO GOOD.

But it's Friday, and by the time the truck arrives, warehouse operations are winding down for the weekend. Workers keep their eyes on the clock, and wrap up their daily activities. The truck ends up sitting at the receiving dock through the weekend -- with its refrigerated cargo still on board.

As long as the refrigeration unit continues to operate during the next two days, no serious problems will ensue. But if the refrigeration unit fails, a truckload of poultry products will spoil. And that could cost the poultry company upwards of $75,000.

That's just what was happening to Simmons Foods, Siloam Springs, Ark. After experiencing these types of serious losses over time, the company began seeking a solution. It wanted to address its inability to monitor the location or operational status of trailers when they were in route.

Simmons, which distributes poultry products to mass merchandisers and restaurant chains via 10 warehouses in northwest Arkansas, southwest Missouri, and northeast Oklahoma, runs 146 trailers throughout that 100-mile radius -- typically hauling between 65 and 70 loads per day.

"Our trailers might arrive at a warehouse that does not have enough controls to check the units," says Dick Bolen, director of fleet operations for Simmons Foods. "If we drop a trailer at a freezer on Friday afternoon, and the warehouse can't unload it until Monday morning, we face some potential liability. Most warehouses monitor all the trailers on their logs, but if human error occurs, we lose a trailerload of poultry."

After some research and due diligence, Simmons Foods chose a tracking and monitoring software solution developed by Star Trak, Morris Plains, N.J. In addition to tracking the location of a trailer at any given time, Star Trak also allows Simmons to both monitor and control each trailer's refrigeration unit remotely.

SOUNDING THE ALARM

In the event of a refrigeration unit malfunction, the software sounds an alarm at Simmons offices. This allows dispatchers to remotely take control of the unit and either restart it or adjust it as necessary.

"The system provides the ability to turn the refrigeration unit on and off, change the temperature setting, and switch the controls from stop/start to constant run," Bolen says. "Anything a worker can do standing next to the trailer, we can now do remotely from our desktops."

Simmons no longer needs to allocate labor hours to have people walk parking lots checking trailers and their refrigeration units. Bolen is confident the investment has already paid for itself, although he says the actual dollar amount saved is hard to quantify because it involves incidents that probably would have happened but never did.

"System alarms give us a heads-up that a unit has a potential problem, so we can service it before it causes further damage," Bolen says. "We save a lot of money by not letting trailers run out of fuel or oil, for example."

Run out of fuel? Don't drivers pay attention to their fuel gauges?

Well, yes. But Simmons trucks regularly ran out of fuel before the company implemented Star Trak because the units run while they're idling in order to keep the refrigeration running.

"Drivers have access to fuel level information, but they don't always know when a trailer runs unattended for an extreme period of time," Bolen says. "That's why we monitor fuel levels from our desktops. If a unit runs out of fuel, it's an expensive job to bring fuel to the unit, prime it, and re-start it."

ROOTS IN RAIL

The Star Trak technology was first developed about one decade ago, in response to the needs of companies running refrigerated railcars.

"They wanted the ability to adjust temperatures and turn refrigeration on and off regardless of where the switch was," says Jerry Neuner, director of sales and marketing for Star Track. "We had to give customers the power to perform a task that would otherwise be out of their hands for days at a time."

Rail and intermodal carriers were early adopters of the technology, and they relied mainly on satellite connectivity to run the system. But when cellular technology grew more widespread and reliable, it became possible for Star Track to offer a less-expensive, cellular-based version of the system -- generating wide interest from over-the-road food distributors operating within a 100-mile radius, such as Simmons.

"More truckload carriers involved with intermodal transport are choosing the cellular version as the coverage improves," Neuner says. "But it's a foregone conclusion on the rail side; if you're doing refrigerated transport, it's a must-have."

But it was not refrigeration that generated the biggest buzz about Star Trak, Neuner acknowledges. Interest in the product spiked along with fuel prices in 2008 because the system allows carriers to better monitor the location of their trucks and communicate with drivers.

"When diesel fuel prices hit $4.50 a gallon, we saw a big uptick in interest from carriers, and it hasn't gone away," Neuner says. "Many private fleets may not have onboard systems in the cab that allow them to communicate and watch over the load."

DIFFERENT APPROACHES

While Bolen prizes the ability to remotely control the refrigeration unit, others say they get the value they need from systems that report information but don't provide remote control capabilities.

One example: 3S Transportation, Bismarck, N.Dak., which serves Midwest and West Coast refrigerated food wholesalers, uses the GlobalWave system offered by TransCore, based in Ottawa, Ontario, Canada. The system alerts 3S Transportation to any operational issues with its refrigeration units, and the carrier doesn't need remote operational control because the trucks typically aren't left alone.

"We don't have trailers that are running in yards other than our own," explains company consultant Mitch Saville. "When a trailer is off our premises, we have a driver with it."

3S uses the GlobalWave system to do a check-in call, monitoring details such as trailer temperature. If the system turns up anything unusual, 3S dispatch simply directs the driver, who is already on the scene, to check and address the problem.

LEAVE IT TO THE DRIVER

There is also still a school of thought within the refrigerated transport industry that driver vigilance is the best weapon against system malfunctions and spoiled goods.

Judy Turano, general manager of University Park, Ill.-based Dynamic Transportation, says the company's network of 30 independent owner/operators doesn't need a remote monitoring system to protect the frozen foods, boxed meat, and produce they haul to grocers and wholesalers.

"Because the tractors and trailers belong to our owner/operators, it behooves them not to spoil their loads," Turano says.

But the flip side of human vigilance is human error, and enough human error -- in addition to mechanical failure -- boosts demand for remote monitoring systems in the refrigerated transport market.

"Shippers can see the benefit themselves," Neuner says. "Refrigerated transport used to be out of sight, out of their hands. It was a helpless feeling for them. People could walk up and shut off a railcar full of frozen potatoes, and it would be days before anyone could do anything about it."

By offering the ability to monitor and control trailers remotely, solutions such as Star Trax put the power back in shippers' hands.

Business Startups

My project: Start a business

Starting a business? This online guide can help. It provides an overview of the process from A to Z and includes as many links as possible to online tools and useful sites – many of them free.

BDC offers - Consulting Advice from an experienced business advisor may be one of your best investments. From in-depth business planning to management coaching, BDC's support can help your business move forward confidently. Financial planning Effective business plan Market research Marketing plan

BDC offers - Financing Starting a business often includes financing and BDC has customized solutions. Financing solutions

Starting a business, step by step Step 1 - Assessment Generate or develop your ideas, evaluate their business potential, and find out if running a business is for you. Step 2 - Your business plan An essential tool to plan and finance your business; includes a marketing plan. Step 3 - Starting up Choosing a name, hiring an accountant / lawyer, legal obligations (registration, taxes, etc) Step 4 - Financing Find financing for your business: tips and links Step 5 - First year More on managing day-to-day operations and planning your company's growth

China's big dollar secret is revealed

Demystifying Chinese Holdings Of U.S. Assets

In a recently published Special Report, our China Investment Strategy service examines China's massive but largely mysterious foreign exchange reserves, especially its holdings of U.S. assets. In an unusual disclosure, Chinese Premier Wen Jiabao publicly expressed his concerns about the safety of China's holdings of U.S. assets, putting the country's massive yet largely furtive foreign exchange assets into the spotlight. Our research finds that China currently has about 64% of its foreign reserves in U.S. assets, a level that has declined gradually from as high as 84% in 2003. The majority of Chinese holdings of U.S. assets are risk free and long-term in nature, but there has been a clear trend in China's reserve holdings that shows a persistent increase in exposure to risky assets and non-U.S. assets over the past five years. Although, China's net purchases of risky U.S assets have dropped sharply since mid-last year, while its net purchases of Treasurys have jumped. This underscores the authorities' reduced risk appetite amid the ongoing global storm. Their reserve diversification process could accelerate again when global financial markets stabilize. Importantly, China's net purchases of short-term U.S. Treasurys have jumped dramatically over the past year, accounting for the majority of the country's total net purchases of U.S. government paper. This is an unprecedented development and a situation that warrants close attention going forward.

Activate your marketing plan...

Getting your marketing plan off the ground

Although marketing is best left to the experts, there is some basic groundwork you can do before hiring a marketing consultant. Once you've understood your unique point of difference, position, target audience and goals, you'll be better prepared to put together a full-fledged marketing plan.

Step 1: Find out where you stand
Begin by evaluating your company's strengths, weaknesses, opportunities, and threats.

Strengths are defined as any competitive advantage, competency, expertise, proficiency, talent, or factor that strengthens your company's position in the marketplace. In a marketing context, the most relevant strengths are those that are enduring and can not be easily copied. Examples are a well-trained sales team, low staff turnover, high consumer retention, and low production costs due to technology.

Weaknesses are the factors that affect your company's ability to independently attain short-term and long-term objectives. Examples are unreliable delivery of inventories, outdated production tools, insufficient marketing efforts, and lack of planning.

Opportunities are ways for your business to be more profitable, such as reaching new markets, managing changes in technology and addressing new consumer trends. You need to look at how your company's key skills can be used to take advantage of these opportunities.

Threats are barriers to entry in your primary markets, such as competitor's actions, labour shortage, legislative hurdles, or detrimental economic/political developments.


Step 2: Conduct an audit
An audit basically involves defining your business, customers and competitors, and looking at your current marketing efforts. Your goal is to determine where to focus your new marketing efforts, both internally and externally.

Business profile
Define who you are: what is your company's mission? What are your company's core skills and expertise and how do they support your mission?

Determine your clients' perception of your business.

Take your strengths, weaknesses, opportunities and threats into consideration.

Customer profile
Look at your client profile and evaluate demographics (age, income, geographic location), estimated demand, expected growth rate, purchase motivation, cross-selling potential, and other critical factors.

Imagine your ideal customer: where can you best deliver value and keep promises, while meeting financial objectives? Does this customer have long-term potential?

Keep track of how business and consumer markets are constantly evolving. If you wait for your sales to tell you, it's too late.

Stay close to your market. This will enable you to forecast demand and perceptions with greater accuracy, identify new trends, detect market changes and see opportunities before your competitors do.

Competitor profile
Find out about your competitors' marketing efforts, pricing, market share, public perception and competitive advantage.

Current marketing efforts
Know exactly how and where you're advertising. Identify your expenditures, performance measurement, and get sales and customer feedback.


Step 3: Design your plan
There's no one recipe, but you can expect the following in a basic plan:

Executive summary
Make it easy for others - your banker, marketing consultant, investors - to understand your plan. Include a brief description of your company (mission, core product/service industry overview, key success factors, market analysis, financial statements and forecasts) and a summary of the marketing objectives and strategy outlined in the rest of your plan.

Current situation / Market analysis
Describe your marketing efforts up to now, the markets you've targeted and why, and your opportunities and threats, such as competition, regulations, or technological changes.

Marketing objective
Describe the desired outcome of your market plan. Make your objectives specific, realistic, time-limited, and measurable.

Marketing strategy
Outline how you will achieve these objectives, covering the 4 Ps (Product, Price, Promotion, and Place).

A few rules of thumb

• Ensure that the product concept, design, packaging and use meet consumers' actual needs and expectations.
• Ensure that the market (and not production costs) determines pricing (estimate perceived value).
• Avoid pushing your customers. Short-term gains in sales may be quickly eroded if consumers are dissatisfied with what you offer.
• Communicate value to selected consumers, not just features.
• Clearly define the message to your consumer before advertising or promoting your offering.
• Design an optimal mix of promotional activities (advertising, direct marketing, events, online cross-marketing) and tools that can best meet your marketing and sales objectives without exceeding your budget.
• Interview consumers prior to implementation in order to ensure your message is clear and meaningful, and your marketing mix is effective in communicating your message.

Once you've done this important homework, the next step is to find an expert to help you put together a fully developed strategic marketing plan. BDC Consulting can help you design a plan customized to your company's needs.

Financing your business...

Financing for innovation

Financing for innovation can mean different things to different businesses. It could involve funding a large-scale initiative such as commercializing a product; financing research and development (R&D); or simply finding the funds for a smaller in-house project such as improving a process.

Depending on your needs and the scale of your project, a few avenues are available: public funds or grants, tax credits, personal investment, financial institutions, angel investors and business incubators.

Available options:

Government funding
Formal R&D involves making an advance in science or technology. Applying for an R&D grant or a tax credit usually means completing application forms and demonstrating how you satisfy the funding conditions and requirements. A significant portion of this funding is directed in the academic milieu, where businesses and universities, for example, work together to conduct R&D.

Canada Foundation for Innovation (CFI): the Government of Canada created this independent corporation to fund research infrastructure, particularly in the academic, health care and non-profit sectors.

Canada Business: this portal, set up by Industry Canada, includes information on financing, human resources, product development, marketing, pricing, intellectual property and research services. Also included are diagnostic tools and articles related to innovation.

National Research Council Canada (NRC): this governmental organization makes non-repayable contributions and provides mentoring to small businesses in Canada that want to use technology to grow. NRC administers the Industrial Research Assistance Program (NRC-IRAP) designed to help Canadian SMEs meet technological challenges they face in delivering new products, processes or services.

Natural Sciences and Engineering Research Council of Canada (NSERC): is a federal government vehicle for investing in research, in science and engineering, and in Canadian universities. NSERC is always seeking opportunities to work with other organizations with common goals to support research and student training.

Business incubators
Business incubators (or "accelerators") generally focus on the high-tech sector by providing support for new small businesses at various stages of development. However, there are also local economic development incubators, which focus on areas such as job creation, revitalization, and hosting and sharing services.

Commonly, incubators will invite young companies to share their premises, as well as their administrative, logistical and technical resources. For example, an incubator might allow you to use its laboratories to develop and test products for a reasonable price before beginning production.

The Canadian Association of Business Incubation has a comprehensive list of business incubators in Canada and links to other resources.

Angels
Most angels are wealthy individuals or retired corporate executives who invest directly in small companies. They are often leaders in their own field who contribute not only their experience and network of contacts but also their technical and management knowledge. According to
Canada Business, angels in Canada have invested in roughly double the number of companies as institutional venture capitalists have. Angels tend to focus on young businesses and to make investments of between $25,000 and $100,000, while institutional venture capitalists usually provide financing in the $1-million range or more.

In turn for risking their money, angels reserve the right to oversee the company's management practices. In concrete terms, that often involves getting a seat on the board of directors and receiving an assurance of transparency.

Angels tend to keep a low profile. To meet them, you have to contact specialized associations. The Canadian Angel Investment Network can help put you in touch with angels. Angel Investors Canada is a not-for-profit organization that promotes best practices in this field.

Venture capital
Successful R&D-based companies can also attract venture capital. Venture capitalists are looking for companies with high growth potential that offer unique products and services in addressing promising global markets.

Venture capitalists take an equity position in the company to help it carry out a promising but high-risk business plan. They also expect a healthy return on their investment, often generated through a merger and acquisition opportunity or when the business starts selling shares to the public. Be sure to look for investors who bring relevant experience and knowledge to your business and share the same objectives.

BDC Venture Capital invests in early-stage technology driven companies strategically positioned in the following sectors: biotechnology and medical devices, communication and information technology, energy, environment, electronics and materials, as well as industrial technology.

Tax credits
Many provincial and federal tax credits are available for small and medium-sized enterprises (SMEs) conducting R&D or experimental development. Information on these credits is available through the Canada Business portal.

For instance, the Canada Revenue Agency's (CRA's) Scientific Research and Experimental Development program, commonly known as SR&ED, provides tax credits up to 35% of qualifying expenditures such as salaries, capital costs, consulting fees and materials. For most SMEs, these investment tax credits (ITCs) take the form of a cash refund. Some provinces have complementary programs.

To be eligible, your business has to show evidence of "experimental development," which could be an advancement happening on your shop floor or generated by the key people on your team. Eligible companies often show that they're taking technological leaps into uncharted territory. ITCs are offered to businesses that develop or improve products and processes in industries such as manufacturing, software, custom machinery and Internet access.

Consultants who have successfully coordinated other SR&ED applications can help you get access to these tax incentives.
A BDC consultant, for example, can help you identify eligible projects, prepare technical project descriptions and accelerate the process with the CRA.

Preparing a SR&ED application can be very time consuming and requires knowledge of tax laws and the ability to convey information about the project in layman's terms. Working with external consultants lets you invest your time in other areas of the business and ensures that day-to-day operations will not be disrupted.

Bank financing
You may consider seeking financing for your innovation projects:

BDC offers long-term financing to companies that want to innovate and can show that their investment will have a positive effect on their bottom line. A clear business case is needed to demonstrate the viability of your project.

We also provide subordinate financing an excellent alternative for growing companies. This innovative and flexible financing solution combines the advantages of a term loan and equity - it does not dilute ownership and can be structured to maximize your return on investment. Subordinate financing is intended for high growth or mature firms with minimal securities that have successfully progressed beyond the start-up phase.

If you work with BDC, you can seek related innovation advice from
BDC Consulting, which conducts innovation diagnoses and helps you develop clear, results-driven strategies.

Wholesalers offer management services.

Profit by Your Wholesaler's Services

Summary

Wholesalers offer services which small retailers can use to strengthen their operations. In some instances, the "helping hand" concerns only sales. In others, it extends to advice and help on recordkeeping, financing, administrative practices, location, insurance, and personnel.

This publication discusses such services pointing out that the range of assistance varies according to the individual wholesaler and the line of merchandise. Some of the services are free, but others carry a fee.

If you haven't checked the management services that your wholesalers offer, you should. Because their business depends on you and the other retailers to whom they sell, they are all common sources of assistance.

Depending on the types of assistance offered, your wholesaler may be able to help you "butter your bread." Some wholesalers offer services on sales promotion, buying, and new developments in products. Others try to "think retail" and also provide services that help to increase profits as well as sales. Some wholesalers may even assist you in the areas of financing and accounting.

The types of services and the extent to which they are available varies with wholesalers and lines of merchandise. Your wholesaler-distributor may or may not provide all of the services discussed in this publication but reading about them may help you when it is time for you to investigate such offerings.

Promotion

Wholesalers often offer help in promoting the products they sell to retailers. Some of these services are free, others carry a price tag. However, as a rule, the price tag is not great because the wholesaler spreads the cost of this sales-building program over a number of retailers.

Featured Items
One of the most effective forms of promotional assistance is preselected merchandise that you can feature co-operatively with other independent retailers. By pooling customer orders for such items, your wholesaler can often secure price concessions or other favourable terms from manufacturers or processors. Generally, the wholesaler passes these savings on to you, the customer, to help you counter the price appeals offered by large retailers who buy directly from the manufacturer in large quantities and thereby get price concessions. In other cases, a wholesaler-distributor will sell these preselected items at cost in an effort to have a major part of your business.

Stock Control
In some lines of goods, the wholesaler provides help with stock control. For example, a system is set up whereby the wholesaler's staff, with a minimum of attention from you, can keep your stock at the level you need for supplying your customers.

One drug wholesaler uses pressure-sensitive labels on products and a computer to help retailers with stock control. When the retail druggist sells an item, he or she peels off the label and pastes it on a card. The wholesaler runs them through a computer for automatic maintenance of the retailer's inventory. This practice helps the retailer avoid tying up money in merchandise that doesn't move.

Point-of-Sale Promotional Aids
Some wholesalers are major sources of display material designed to stimulate "impulse buying" for both nationally advertised and private brands. Because much of this material is furnished by manufacturers, the wholesaler keeps retailers informed about what is available and tells retailers how the aids can be used most effectively. In some instances, the wholesaler helps retailers in building effective window, counter, and bin displays. Sometimes the wholesaler may send an employee to work on the retail sales floor during special promotions.

In some lines of business, wholesalers offer another type of promotional aid—showrooms. For example, they allow their dealers to bring retail customers to their showrooms to inspect models which the dealers do not carry as regular stock.

Co-operative Advertising
Advertising on a co-operative basis with a wholesaler-distributor can be a reasonable economical way for featuring your merchandise and building customer loyalty. For this type of advertising, many manufacturers give the wholesaler an advertising allowance on purchases. This practice reduces costs that are charged on a percentage basis. Depending on the type and number of potential customers, the media most often used by wholesalers are radio and television, newspapers, and handbills.

Market Information

Wholesalers often supply market information that can help a small retailer attract customers and satisfy their wants. In numerous contacts with local businesses and distant suppliers, the wholesaler accumulates information about consumer demand, prices, supply conditions, and new developments in the trade. The wholesaler relays the information to retailers through bulletins, newsletters, order books, invoices, and sales people. One small retailer summed up these marketing services by saying that, "The wholesaler is in a good position to tell whether things are slowing down or changing and keeps us aware of these changes."

Consumer Demand
The wholesaler's position between national and regional suppliers and local buyers enables him or her to "feel the pulse" of the consumer demand. The wholesaler can recognize, for example, events at the national and regional levels that are likely to bear on the amount of local consumer spending. Through numerous contracts with local retailers, the wholesaler learns which items have attracted the attention of consumers and which items have not. By reviewing orders, he or she can sense when demand for a product is changing and advise customers to adjust their buying and inventories accordingly.

Price
Often you can get comprehensive and up-to-date information from your wholesaler. Most wholesalers can collect competitive price information from their customers much more economically than the individual retailer could collect it.

Suggested retail prices are also supplied by many wholesalers, particularly those offering co-operative advertising plans or those who sell their own private brands.

Supply Conditions
You can usually depend on your wholesaler to keep you informed about primary market conditions that would affect the supply of a particular product. Information concerning the possible scarcity or superabundance of consumer goods or expected major shifts in prices are of particular importance when they reach you in tome to be reflected in your buying plans.

New Developments
One of the easiest ways to keep abreast of new methods, new products, and new ideas is through the bulletins, newsletters, and other publications circulated by many wholesalers. These media often provide condensed versions of articles appearing in the trade or business press, lists of new products being introduced by manufacturers, pictures or descriptions of new equipment, and suggestions for improving merchandise displays and selling performance.

Accounting Systems

A number of wholesalers help their retail customers to maintain adequate accounting systems. Several types of accounting assistance are available through wholesalers who offer this service. Some wholesalers have compiled forms and manuals that retailers can use as the basis for good records.

A few wholesalers have retail accounting departments that perform virtually the entire accounting function for their customers. Retailers who use such a system supply operating information to the wholesalers at periodic intervals.

Other wholesalers have negotiated "umbrella" contracts with private accounting firms. These firms, in turn, do the accounting work for a given group of retailers—often at a smaller fee than the accounting firm could offer an individual retailer.

Policy and Methods

Many wholesalers offer guidance and counsel that retailers can use in setting policies and in improving methods. Some of the areas covered are public relations, housekeeping methods, and administrative procedures. Such assistance is usually available for the asking through the wholesaler's sales staff. In some instances, meetings are held to discuss such subjects, and retailers are kept abreast of new developments through bulletins and newsletters.

Many wholesaler-distributors belong to a trade association that specializes in their commodity line. These associations often publish monthly magazines as well as brochures aimed at helping the retailer.

Suggestions on setting policy and improving methods can be helpful because many small retailers get involved in the day-to-day tasks of keeping the business moving along. When this happens, they lose sight of the big picture. Often they overlook opportunities to improve their operations. For example, they know the value of good public relations but do nothing about it.

In other instances, they may not know how to build a favourable image and their time and money are spent uselessly. Because he or she is not involved in the routine of a store, the wholesaler can often detect such management weakness in customers and suggest ways for correcting them.

Looking Ahead

Many wholesalers go beyond day-to-day operating assistance and offer services that are designed to help their customers with long range problems. They offer help on real estate problems, financing, insurance and personnel.

Real Estate
Some wholesalers pass on to their retailers tips on stores that are for rent or for sale. These tips are given to their customers when they are considering a branch store. These wholesalers usually maintain up-to-date real estate files by gathering information from their salespeople, customers, newspapers, and real estate agencies.

Depending on your wholesalers, you may be able to get help in analysing the suitability of various locations, including an evaluation of the market potential. Some wholesalers keep a finger on the direction and character of urban development and offer advice and desirable future locations. They help the retailer establish a priority rating for each location. New locations, particularly in shopping centres and other large-scale trading area developments, may involve complicated leasing arrangements.

Finance
In some cases, wholesaler-distributors help their retailers with long range financing. For example, a wholesaler may lend funds to enable a retailer to modernize an old building, acquire a new site, or erect a new building. The need for this type of financial assistance is especially evident in the retail food business. Here the trend toward costly supermarkets coupled with the inability of banks to help any but the best credit risks has greatly increased the importance of wholesalers as sources of direct financial aid.

Indirectly, a wholesaler can help you with financial needs by supporting you at the bank or insurance company. The loan is made on the wholesaler's recommendation, and the wholesaler generally guarantees all or part of its repayment.

In long-range financing, the retailer who deals with a relatively few wholesalers is in a better position than the retailer who buys small amounts from many wholesalers. The wholesaler naturally looks for retailers who have proved themselves and whose business offers growth possibilities for the wholesaler too.

Insurance Counsel
A number of wholesalers try to help their customers secure adequate protection against risks from theft, fire, smoke, and water damage. This assistance may involve:

• keeping you alert to your insurance needs;
• making sure that your insurance is kept in force;
• helping to get your claim settled as quickly as possible if a loss does occur.

Personnel
Your wholesaler-distributor through his or her sales staff can help you obtain qualified store personnel in informal ways. For example, the wholesaler might tell you of an outstanding salesperson who wants to change jobs. Some of the larger wholesalers have even set up auxiliary personnel departments. Such departments maintain files on persons seeking retail employment and refer prospective employees to retailers on request.

Which Services Can You Use?

Not all of the services available from your wholesaler are equally important to you. Some may be indispensable. Others you can handle more effectively yourself. Some services carry charges, and you must decide whether or not they are worth their cost.

The first step in determining which services you can use is finding out what your wholesaler offers. Get all the details you can about each service that is available to you. Find out what advantages a service has for you. Find out what obligations it carries.

First Things First
At this point, a few words of caution are in order. As far as you are concerned, the main duty of a wholesaler is to supply you with items that you sell at a profit. Success in retailing starts with shelves and displays full of goods that customers want. When accepting management assistance from a wholesaler, you must be sure first that the distributor is a reliable source of merchandise.

A small retailer, however, should know his or her customers better than the wholesaler. In mutual assistance, such as special promotion, the retailer should prevail. Resist the temptation to overbuy on attractive offers. For example, is there enough profit in using a salesperson to train your sales staff and sell to customers when you have to buy in gross lots rather than the usual case lot? It is your loss when the item doesn't move as fast as was thought. Try to schedule special promotions that are offered by the wholesaler to suit your plans for promoting sales and profits. Use co-operative advertising when it is to your advantage, but don't be a slave to it.

In fact, don't be a slave to outside assistance whether it is from a wholesaler or another source. Regardless of a wholesaler's good intentions—to help you sell more at a profit—never forget that you are the boss.

Compare Services
When you have the details on the wholesaler's services, compare them with what you already have. If he or she can provide, for example, an accounting service, how does it compare with yours? Is it easier to use? Harder to use? Cheaper than yours?

Follow Through
When you sign for services from your wholesaler, follow through with your end of the agreement. Provide the information and direction needed to render the services you need. For example, when you use a wholesaler's accounting service, you need to send daily expense and revenue data on a given schedule and format so that the accounting staff can include your data in its work load.

Matters that can cause misunderstandings should be pinned down. For example, the order form should spell out prices, terms, dates of shipment, and liability for shipping costs. When an agreement is written, often mistakes can be corrected without damaging your relationship with the wholesaler. A verbal agreement may be another story.

If you want help in selecting and training personnel, you will need to give the wholesaler job descriptions to identify the types of employees you want and to determine whether applicants have the necessary skills.

Talk with your wholesaler and other business associates before obligating yourself. Make sure you need a service and figure out exactly how—and how much—you will profit from your wholesaler's services.

Source: U.S. Small Business Administration
Prepared by: Government of Saskatchewan

Good personal selling creates a competitive edge.

Improving Personal Selling in Small Retailer Firms

Summary

Good personal selling in retail stores is hard to find today. The small retailer who works at building a good personal selling effort will develop a valuable competitive edge over large competitors.

The basic elements for developing a program to improve personal selling in your store is discussed in this publication. If you are willing to develop your own program based on the framework and examples presented, your personal selling program will be a more effective and rewarding one.

Good personal selling in retail stores is getting harder and harder to find today. This is particularly true in the large multi-unit retail establishments that have increasingly stressed self service at the expense of good personal selling.

The de-emphasis of personal selling by large scale retailers leaves a gap in customer service that the small retailer is in a good position to fill. By emphasizing good personal selling, the small retailer can gain a competitive edge not easily matched by the bigger stores. It is much easier for your large competitors to dominate in such areas as merchandise assortments, pricing, and advertising, than to provide a well developed personal selling effort.

Good personal selling, however, does not automatically occur simply because the retail store is small. Nor does high quality personal selling result merely by paying sales people more money. Rather, good personal selling results from a carefully developed program which accounts for the major elements necessary in all successful personal selling programs.

This publication discusses a basic framework for such a program as it applies to personal selling in small retail stores. By patterning your own program for improving personal selling along the lines suggested in this publication, you are likely to improve the quality of personal selling in your store.

Good Personal Selling

Before discussing the framework for improving personal selling, let's define good personal selling at the retail level.

Personal selling in retailing is essentially a matching of the customer's needs with the retailer's merchandise and services. In general, the more skillfully this match is made the better the personal selling. If salespeople make a good match not only is a sale made but a satisfied customer is created (or maintained). Thus, a long term, profitable relationship can be established.

In the illustration below the salesperson is pictured as an individual attempting to match the needs of customers to the retailer's merchandise and services. If the match is made effectively, the salesperson is more likely to make the sale and satisfy the customer who will continue to patronize the retailer. The illustration suggests that there are three basic skills needed by salespeople to make this match effectively.

Has The Salesperson Made A Good Match?

Retailer's Merchandise and Service

Needs of Customer

Satisfied Customer

Sale is Made

Continued Patronage

• Salespeople must be skilled at learning the needs of the customer.
• They must have a thorough knowledge of the merchandise and services offered by the retailer.
• They must have the ability to convince the customers that the merchandise and service offered by their store can satisfy the customer's needs better than that of their competitors.

A Program for Improving Personal Selling

Developing a program for improving these three basic selling skills in your salespeople is the essence of building a better personal selling effort for your store. The framework for the program consists of three basic elements:

• selecting people who are suitable for particular sales positions;
• providing training; and
• devising an appropriate compensation plan.

Selection

Finding good salespeople is a problem for both large and small retailers. Both are frequently heard talking about how hard it is to find "good" people. What they fail to realize, however, is that much of the problem is of their own making because they do not define clearly what they meant by good sales people. In short, these retailers do not specify what qualities they want in the salespeople they are seeking. It is no wonder then that they are not satisfied with many of the people whom they hire.

An effective way to help avoid this problem is to use job specifications. This device has been used successfully for many years by large industrial firms. And, it can be used with equal effectiveness by small retailers. A job specification is basically a written statement, typically no longer than one or two paragraphs, delineating the requirements for a particular job. For example, a job specification for a retail sales position in a sporting goods store might appear as follows:

An Example of a Job Specification for a Sales Position in a Retail Sporting Goods Store;

• type of Job;
• retail sales of sporting goods; and
• requirements of the Job.

This job involves mainly in-store sales of full line of sporting goods ranging from items of low unit value (such as golf balls) up to higher priced merchandise (such as complete sets of golf clubs and skiing equipment). The emphasis is on big ticket items. Telephone follow up selling is expected and there is occasional stock work.

The value of the job specifications is that it forces the retailer to be more explicit about what the job requires and thereby provides a guide for appraising the capabilities of prospective employees. For example, since the job discussed above emphasizes the big ticket items, the retailer should look for people who have this kind of experience. There are many instances of salespeople who can do an excellent selling job on low unit value merchandise but have trouble closing sales on the big ticket items. Job specifications help to avoid such problems.

Training

When the word training is mentioned, the small retailer typically associates this with the formalized programs conducted by some large department stores and national chains. However, sales training by the small retailers does not have to be, nor should it be, a formal and structured program. Actually, any conscious effort the retailer makes aimed at improving the three basic skills needed for effective retail selling is a form of sales training.

To get you on the road to thinking about the kinds of approaches you might use, here are several examples of sales training methods used by some small retailers.

An excellent method for developing a salesperson's skills at learning customer needs is through role playing. Role playing consists of acting out the customer-salesperson relationship by the salespeople. One person plays the part of the customers, and the other plays the part of the salesperson. Next time around, they reverse the roles. Role playing enables salespeople to see various sales situations from the customers' point of view. The skill necessary to quickly "size up" customers (learn about their needs) is rapidly sharpened through role playing. A particularly good time for you to try out this method is during slow periods when your salespeople are just "standing around" anyway.

A good approach for improving the second skill—knowledge of the merchandise and services—is to make use of regularly scheduled sales meetings. Such meetings offer an excellent opportunity to discuss the features of a new product, changes in store policies, new merchandising strategies, or other matters relating to the store's merchandise and services. These sales meetings do not have to be formal and precisely scheduled events. Instead, you can conduct them right on the sales floor during slack periods or shortly before the store opens for business.

What is important is that you hold these sales meetings regularly and frequently (one per week at a minimum) and that each meeting has a specific theme or focus. For example, at one meeting you might want to discuss the features of a new line of products which the store is now carrying and how to introduce these to the customer. The next meeting might focus on changes in the store's merchandise returns policy. The meeting after that you might talk about the sales strategies for the upcoming inventory clearance sale. If you hold these meetings regularly, you will be pleasantly surprised at how much better informed your salespeople will be about the store's merchandise and service offerings.

Training aimed at improving the third skill—the ability to convince customers that a store's merchandise and service offering is superior—is perhaps the most difficult. Some people believe that an individual either has this skill naturally or does not, and hence training makes little difference. While there may be some degree of truth in position to the extent that people do differ in their natural communication abilities, training can still make a difference. Such training can range from encouraging your salespeople to take a formal course in salesmanship to informal sales seminars which you can organize at your store. These seminars may be nothing more elaborate than sitting down with your salespeople for a half hour over a cup of coffee to discuss ways by which your store's merchandise and service offering can be better communicated to customers.

These sessions, if conducted informally (but regularly), will foster a constructive interchange of ideas about selling. For example, one salesperson might have developed a good argument which he or she used to successfully close a sale when it looked like the customer was ready to walk out. Good salespeople do like to talk about and share their success stories and can contribute to a sales development program.

Compensation

Unfortunately there is no one best way of compensating retail salespeople. Compensation plans depend upon the type and size of store, the number of employees, and the policies of the firm. There is however, a general principle that should be observed in any type of compensation plan. This is that compensation should be closely linked to performance.

The key to gaining a real understanding of the principle and being able to apply it to your compensation plan is in how you define performance. Performance does not mean simply sales volume. While the importance of sales volume cannot be over emphasized, other factors such as providing information to customers (which can lead to future sales), creating goodwill for the store through friendly and courteous service, and a willingness to help out in non-selling tasks are also important and should be rewarded. Failure to recognize these other aspects of performance is a mistake made by many retailers. Hence, they tend to reward only the salespeople who make the most sales and neglect others who have acceptable sales volumes but do a better job in other aspects of performance. Of course, if a salesperson does well in non-selling work and not in sales, this weakness must be dealt with through increased sales training.

Thus, if you feel that your salespeople are doing a good job, regardless of the volume they produce, let them know it. See if you can devise a way of reflecting your appreciation in their compensation. One retailer developed a rather ingenious approach using repeat business as a reflection of customer goodwill. This retailer developed an increasing schedule of commissions for sales to the same customer. This encourages the salespeople to treat customers right so that they would come back and ask for them by name. With some careful thought you can develop your own plan to more effectively reward good personal selling performance.

Source: U.S. Small Business Administration
Prepared by: Government of Saskatchewan