Manage Forward in Unstable Times
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It’s not what we were hoping for in 2022, but our reality is continued uncertainty with market disruption and volatility. We’re facing another year of unknowns – a looming global energy crisis, rising inflation, continued unstable supply chains, a pandemic that won’t go away. And it goes on.
You know you should have a sales forecast, and goals set, and business plan updates, but maybe you didn’t get to it. Or maybe you did and the world keeps changing. In this unpredictable time, you’re wondering how to move forward with your costs increasing and wondering how to pass those on to the customer.
We’re not going to presuppose all of the solutions, but we suggest that you do keep your eyes wide open as you progress through your upcoming busy season. Here are some recommendations to manage forward.
1. Create Easy-to-Track KPIs
KPIs or Key Performance Indicators are exactly that, INDICATORS. They’re not monthly or annual top-end goals or sales forecasts. These are the simple things to track processes or sales unit items, things that you can track to get a clear, but estimated, sense of how well the business is doing when it’s busy or slow.
For example – in grocery stores, historically they have tracked bread sales. The sales of one SKU (stock keeping unit) of bread can be quite a strong indicator of how the store is going to do in overall sales.
If you’re selling at a farmers’ market, or a farm gate, you might want to track heads of lettuce sold or how many people come up on a daily basis? Track how many people you engage. Or how many transactions (because you know your average sales per transaction!).
Use the KPIs to track some of your sales and indicate some of the adaptions you’re making. Set quick goals and track things in your sales and operations, realizing that some of your costs and issues are going to be outside of your control.
2. Double Down on Efficiency
One thing that IS inside your control is production efficiency. As a food producer or even a farmer, instead of just passing on any increases to customers, consider how you can lessen that increase by really taking a look at your efficiencies and see where you can improve. This is one of those areas that will pay dividends for the long term in good times and bad.
As a small-scale food business, you can be at a disadvantage compared with the large producers. Control what you can. Track and improve efficiencies and logistics that you have control over. Focus on improvements for the short term, and make note of what could be further enhanced later in the year or into the future.
3. Your Small Producer Advantage
An advantage you do have over the big guys is the ability to pivot and adjust, hence the reason to look at your KPIs and make almost real-time adjustments. You don’t have a big business operation that needs a committee to make major shifts in your production or delivery. Be smart and nimble as you assess, plan, and act to make changes.
Further to that, when you’re passing on a price increase (if that’s what you need to do), be fully transparent about it. Customers tend to trust small food businesses and they’re going to be well prepared for an increase because the news is full of these rising price stories and everybody is talking about it.
Be transparent and genuine, and indicate that you’ve done your homework and let customers know that you continue to make changes to your operations to control costs to try to minimize the increases. Remind customers why they should still want to buy local due to supply chain problems, some that may not go away. This is a specific time that we all need to support local businesses, because it’s economically better for all of us.
Carve out the time, even half an hour or an hour each week to look at those KPIs, and discuss with your team what’s going well and what’s not. Even if it’s obvious, make note of it. Drill down to the why and figure out what adjustments you can further make now and in the next few months.
Remember, in volatile times, adjustments that you make in your marketing or products are often times where the magic happens. Although it may feel like tough times, you might find that by tracking and making adjustments now, you’ll uncover data that will lead to long term benefits.
Do you have questions about how to set up your KPIs or other tracking systems? We’re here for you. Contact us and to see where you can improve your business planning and goal setting processes.