By Jamie, Yung Yu Jing
My three weeks consulting process for Norma’s small fashion wear shop was a meaningful experience where together with my partner Stella, I got a taste of what business consulting truly means, from conducting hands-on assessment of a real-life business, to finding out issues to work on and improve so as to better the profitability and effectiveness of the business, to exploring and testing out different alternatives of recommendations before focusing on implementing the solutions that are most cost-effective and impactful. After several deep analysis and discussions, we decided to concentrate on the two main areas of accounting and marketing for Norma’s business: by creating a simple but sustainable record-keeping system and a clear, precise and concise (10% discount for a carefully selected 6 set items) banner for Norma and Leny to follow-up on in the long-term.
(Me (right) and Stella (left) spending our afternoons working closely with Norma and Leny outside her shop in the market)
For the Accounting aspect, as explained in my first blog as we first got introduced to Norma’s small business, Norma does occasionally write down the sales she made each day, but only when she remembers them, and they are inaccurate and incomplete at times. Additionally, Norma’s initial records has no computation of the total revenues nor expenses earned and spent, so Norma does not know her weekly nor monthly profits, nor which items are most or least profitable, nor the frequency of the sales made. Thus, Stella and I were wondering what is the point of her recordkeeping other than making Norma feel better at seeing the figures and having an intuitive, brief idea of her business figures. To remedy the situation, we set to work and created a simple template for Norma and Leny, firstly to separate the business accounts from her personal accounts, and secondly to compute everything comprehensively such that they can generate business insights from the more accurate and complete figures, and the totals, trends and analysis accordingly. After Stella and I recorded down the 4-week interval figures for Norma first to compute the profit composition, cost breakdown and frequency of sales for the month of May – following-up on our examples, Norma recorded down the first week of June’s figures according to our template, but has yet to find time to calculate the totals. We have been strongly encouraging her to keep up with the new record-keeping system, and we will check up on it on Friday again.
(Computing and following-up on our new record-keeping system for Norma)
To move onto the Marketing aspect, the next part of our recommendation, we generated crucial data from our accounting system. Firstly, we explored then rejected the alternative possibilities of different recommendations due to feasibility and effectiveness issues. For example, we crossed the initial ideas of product repositioning, creating a Facebook page, or adding Visaya in our banner, or creating business cards or a direction sign for Norma’s shop. After weeding out inappropriate or non-cost-effective ideas, Stella and I decided to focus on our one best marketing recommendation plus new pricing strategy in the form of cross-selling, after thorough discussion with Norma and Leny – to create a 10% discount banner for 6 selected set items. For the discount, we have negotiated with Norma and convinced her to offer a discount twice of the normal one that she used to give for individual items purchased, from 5% to 10% for set items, while keeping her profit margin, so as to successfully capture the purchase demand of the 50% of customers who prioritize the Price as the first most important factor that they consider when making their purchase decisions. Next, we selected which items to bundle up with in set options according to our previous Profitability Analysis and Frequency Analysis, specifically, three sets are based upon the least frequently purchased items and least profitable items in the previous month of May, hoping to give customers a cheaper option while promoting sales simultaneously. Another three sets are based on the Customer Analysis of our targeted three customer segments. We also promoted the largest strength of Norma’s shop: the option of Customization by including this tagline on the banner: “Tailor-Made Uniforms, Pants & Shorts”. We aim to solve the issue of differentiation so that we can give certain leverage for Norma’s shop even with the upcoming huge threat of the Big Q Mall being built in the near future. Lastly, we went to Regatuna Photo Studio to order our banner, to be printed with a size of 3 x 1” at 150 Pesos. Norma is willing to share the cost with us and we plan to attach it at the front of her shop once it is ready.
(The new banner designed for Norma as new marketing and pricing strategies)
To conclude my last blog here, not only did Stella and I spent many afternoons outside Norma’s shop observing her business and talking with Norma and Leny (Norma’s sister-in-law and only employee), but we also cultivated a great friendship with them both, they would offer us snacks and drinks while we worked, and they even invited us to dinner with them and their family in Garcia on Friday. Once, Norma even requested us to help her translate a letter from English to Chinese, about her “kind request” to her neighbour where Norma wishes her neighbour would repair his broken gutter since it would flood Norma’s yard during typhoon. In this sense, we bonded with Norma beyond the scope of discussing about how to improve her business, but also personally, and she would share with us her private problems and stories sometimes too as we returned ours. Stella and I are so grateful for Norma and Leny’s hospitality, from their cooperation to their willingness to incorporate our suggestions and changes, that we printed our photo together and bought her an elegant floral photo frame to go with it as a parting gift and remembrance after we are gone.
(Norma treated me to chocolate drink and mango with puto mayo – sticky rice)
(Our parting gift to Norma and Leny)
Overall it was a very fruitful exchange and two-way learning process: while Stella and I try to offer new analyses, strategies and the most feasible recommendations for Norma’s business, simultaneously Norma and Leny are offering us insights and exposure into the Filipino culture and lifestyle as well.