Tag Archive | "value"

Business Sense: Identifying Value Added Activities

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Business Sense: Identifying Value Added Activities

Posted on 02 August 2018 by CRadmin2

By Harry Hollander of Moraware

Having trouble finding good help these days?

Ed Young (WeReduceChaos.com) recognizes that pretty much everyone is struggling with this issue. In a growing economy, growth in jobs outstrips the supply of good labor.

In addition to getting more creative in finding and attracting new employees, an often overlooked solution is getting more value from existing staff.

Think about the term value added. Truly value added activities are those which transform a material into a product that a customer is willing to pay for – a good example is the saw operator. Value added time for that job is ONLY the time that the blade is cutting material. Everything else – everything – is non-value-added.

You’re paying for the good labor you already have, plus spending money and time chasing new talent. How much of that time & money is being wasted on non-value-added activities?

As soon as you finish this article, take a few minutes to watch your saw operator. Which activities are value added and which are not? How much of your saw operator’s day is spent on non-value-added activities?

Next, figure out how can you reduce or eliminate those non-value-added activities. Would it make sense to have a low-wage helper moving product around in your shop to allow your highly skilled and higher paid operators spend more time on value added activities? What can you do to speed up loading and unloading the saw table? Download the handy VA/NVA analysis tool to quantify the impact of making those changes.

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Business Sense: Appraising the True Value of Fabrication Equipment

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Business Sense: Appraising the True Value of Fabrication Equipment

Posted on 07 June 2018 by CRadmin2

By Harry Hollander of Moraware

It takes machinery to fabricate countertops in the stone industry: big, heavy, expensive pieces of equipment. From an accounting perspective, the value of the equipment on the shop floor is determined by a depreciation formula, which may or may not reflect its true replacement value. How much you could actually get for your equipment on the open market might be something entirely different.

There are good reasons why you should be aware of those assets’ true value. “For one, you’re going to want to know for insurance purposes what your assets are worth so you could get the proper insurance,” explains Terrance Jacobs of TCL Asset Group, a machinery management and advisory firm. “In many cases, when dealing with a bank or a leasing company, you want to pledge assets that are paid off to improve the manufacturing end of your company.”

Determining Value

The only way to know the market value of fabrication equipment is by using the Sales Comparison Approach. “Instead of just saying a piece of equipment is going to depreciate by 5 or 10% every year,” Jacobs says, “we go out into the market and we look at similar or the same items and see what they’re selling for. That’s how we determine what the asset is worth.”

Knowing the street value of your equipment can come in handy, for example, when you are ready to expand the business and want to finance capital purchases through a bank or leasing company. “It’s difficult to get money if you’re just using your receivables for collateral,” Jacobs explains. “It’s a lot easier to pledge something that’s tangible and can be resold right away.”

As a buyer and seller of specialized equipment, Jacobs has a piece of advice for anyone considering going the used machinery route. “

One of the main things to look for is the date of manufacture as opposed to the date of purchase,” he says. “So when you’re looking at a piece of equipment and someone tells you that they just purchased it, you might assume that it’s brand new when it really was manufactured 15 or 20 years ago. Also, if you look at a piece of used equipment and it’s shiny and beautiful, with no scuff marks on it, you might question why it looks that way. The stonework industry is messy, there’s a lot of water, so you expect to see some wear and tear. If something has recently been repainted you might wonder what is hidden under that new paint.”

The Hidden Costs

And, finally, start with the end in mind. If you ever wanted to sell your equipment, for example, or use it as collateral for a loan, how much would it cost to get it out of your facility? “It could be a beautiful piece of equipment; brand new and never used,” Jacobs says, “but if it’s inside four concrete walls and it was dropped in with a crane on the 10th floor of a building, it’s going to cost a lot of money to get it out. Therefore, even though it’s a really nice piece of equipment, the value’s going to go down.”

For further information on machinery appraisals you can contact Terrance Jacobs at [email protected]

Listen to Terrance & Patrick Foley of Moraware talk about equipment value and auctions: Listen to StoneTalk

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The Best Stuff Vs. The Right Stuff: What Quality Has To Do With Getting Full Price, Rate or Fee

Posted on 03 June 2015 by cradmin

By Bill Brooks

“But I Can’t Sell on Quality … Ours Aren’t Really the Best on the Market.”

Most salespeople believe that quality means “best,” but quality does not really mean best. Quality means conformance to standards and expectations – your prospect’s standards and expectations. Quality means the right stuff – not the best stuff. Quality is the correct stuff for your prospect’s requirements and needs, not the best stuff made.

For example, what is a quality tire for your car? The only way to answer that question is to ask another question or a series of questions:  What are you going to use the car for? Are you going to race it? Or drive to work in the snow? Go out and buy the best racing slicks you can get, put them on your power-traction wheels and see how fast you can accelerate in six inches of snow. Or put racing slicks on your front wheels and see how fast you can stop on wet pavement while going downhill. You might say that you bought the “best tires money could buy,” but you’ll be disappointed in their performance under those conditions.

Avoiding the “Your Price Is Too High” Objection

If you want to avoid the “your price is too high,” conversation with prospects, you’d better have “the right stuff.” Selling certainly includes telling your prospects that your offering is the correct product (and why it’s the right stuff) for them. But if your offering is not the right stuff – if you’re selling high-quality walnut wood and your customer only needs cheap plywood, for example – the only way you’ll get your customer to buy the wrong stuff is to cut your price.

If they’re building fine furniture, they might buy your walnut. But if they’re putting in subflooring, they won’t:  They don’t need it, don’t want it and can’t afford it. The only way you’ll sell them high-quality walnut for subflooring is to cut your price.

If you don’t have the right stuff for your customer – the quality of products or services that conform to his or her standards and expectations – you have a problem. You will never get full price, rate or fee for products or services if you try to sell your prospect the wrong stuff for the specific project he or she needs it for. You’ll be selling high quality walnut at the price of plywood!

“But I Sell a Commodity – and People Buy Commodities Solely on Price.”

Many salespeople feel that they’re in a commodity business, and they believe because of that, they absolutely must sell on price, but nothing is further from the truth. Selling a commodity doesn’t mean that you automatically must sell it on price.

A commodity, by definition, is any item that cannot be easily distinguished from others in the marketplace – something that is in direct competition with a large number of other extremely similar products or services. For example, suppose we have two water glasses for sale that are identical in terms of size, shape, appearance, etc. If we tell you one sells for two pennies and the other sells for one penny (and you’re buying water glasses – not wine glasses), which one are you going to buy? You’re going to buy the one-penny glass, of course, because all other things being equal, people buy on price, right?

But that’s just not true. Other things are seldom, if ever, really equal. What if you don’t like the salesperson who is selling you the glass? What if the glass won’t be shipped to you until next month? What if the vendor only has eight glasses, and you need 12?

It is the salesperson’s job to make sure the customer knows all of the following:

  1. Other things are not equal.
  2. He or she should buy the salesperson’s (higher priced) item because it’s actually a better deal.
  3. It’s a better deal because it provides value: the service is better, the delivery is better, the salesperson is better and so on.

The product or service itself may be nearly identical to others in the marketplace, but all the things involved in getting the product or service to the customer differentiate one fabricator from all the others.

There is ample evidence that even when the product is equal to another – identical product – people don’t always buy on price. Think of your neighborhood convenience store. Typically, just about every item you’ll find in a convenience store is more expensive than it is in a grocery store. The very fact that convenience stores exist proves that people will pay more for the exact same product (as long as there is some valuable differentiation – in this case, convenience).

Milk is sometimes as much as double the price at a convenience store. But If you get a craving for some cookies in the cupboard at 11:00 at night, but you don’t have any milk, chances are very good that instead of driving all the way to your grocery store, you’re just going to run up to the convenience store, pay more for the milk and get home so you can have cookies and milk while you watch The Tonight Show.

The Final Word

As a salesperson, you MUST differentiate your company’s products and services from your competitor’s somehow, someway. That is what selling is all about. Otherwise, a computer could answer the phone and direct the customer to a price quote on the web, and all orders could be filled digitally as well.

Think about the last time a prospect told you they could get the same product or service at a lower price. Was it really the exact same thing? What were the differences between your product and the others? The way you deliver it? The service you offer?

The facts are, other things are never equal – and even if the product or service is nearly identical to another, prospects rarely buy only on price. Remember, consumers and commercial buyers say they buy on price because they’re trying to get you to cut your price, but their behavior belies their words!

Your goal with every prospect should be to find out what his or her standards and expectations are – and which of your products or services can best meet them. That way, you’ll get the price, rate or fee you ask for, and you’ll have customers who perceive you as a high-quality salesperson.

About the Author

Bill Brooks, CSP, CPAE, CMC, CPCM, former CEO of a $300 million corporation and two-time sales award winner from an international sales force of 8,000, Bill has real-world expertise. Bill has spoken or consulted in more than 300 different industries while being engaged by at least 150 clients an astonishing six times each.

Copyright© 2015, Bill Brooks. All right reserved. For information, contact FrogPond at [email protected].

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Price Vs. Value

Posted on 02 April 2013 by cradmin

My editorial in our latest countertop newsletter received so many responses, it only seemed right to post it here, in our blog, and share it with the broader audience:

In a recent conversation I had with a fabricator in the South, he mentioned that he was having a hard time selling against a competitor that was offering “granite installed for $9.99 a square foot” – yes, you read that right. I wondered how the competitor could even cover his costs!

The fabricator admitted that his first instinct was to lower his price a bit (not down to 10 bucks a square foot), but he figured it would be selling himself short in the long run. I couldn’t agree more. Once you succumb to the price game and lower you prices, it is a long hard climb just getting back to where you were.

My advice to him was to avoid selling on price altogether and sell on value instead. It isn’t about the lowest price, it’s about the best price. The two aren’t always the same, especially for major purchases. The best price is the price that offers the value that a customer wants at a price you can live with. If people only bought on the lowest price, we would all be driving Kia’s and living in mobile homes!

To establish value, I believe there are two things you must do: 1) offer a quality product; and 2) educate your customers. Demonstrate your knowledge of your products. Explain to them how you do a job right. Show them that with you, they are investing in something that is going to make them satisfied, not just the cheapest thrown-together countertop they can buy. In the end, that education you offer customers will make them feel better about their purchase, and land you the sale.

Feel free to  drop me a line with your thoughts at [email protected].

Sincerely,

Brian Jones, Editor

www.CountertopResource.com

 

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