At present, many private garment enterprises in China are facing development bottlenecks. Due to the increasingly fierce market, most industries have entered a buyer’s market where supply exceeds demand, and enterprises are unprofitable. The pursuit of a quantitative growth model faces severe challenges. If a company can’t make money, what other reasons are there?
Let me share with you six things that eat up corporate profits that we have ignored. Great hidden possibility.
01
Pursue performance growth and ignore profit growth
During daily research and consulting work, I found that the heads of many manufacturing companies often care very much about the size, technical equipment, production capacity, and sales volume. However, they understand that the most important thing is profit. When asked the question, he shook his head repeatedly. It turned out that there was not even 3% profit, and it was even on the verge of losing money. A certain home textile company even wanted to invite celebrities to endorse the brand and put the brand image on CCTV.
If the owner of this company is calculated, the cost of endorsement fees, advertising fees, and promotional materials will be at least 8 million, and the company’s products are low-end products, and the profit It is less than 3%. If through celebrity endorsements, sales double from the existing 150 million, only 4.5 million more profits will be added. The difference between input and output is 3.5 million. Not only will it not be able to change the current low-profit dilemma, but it will also The compensation is more than 3 million yuan. This kind of business is obviously uneconomical.
However, there are some domestic companies that, with their endless pursuit of sales, invest heavily in advertising. As a result, their capital chains are interrupted and they cease to exist. This kind of practice that only looks at rising sales without paying attention to profits often makes great achievements, but in the end collapses…
02
Lack of service takes away profits
The high-quality service of many companies is just a cover. Once you call, When I found the service staff, they immediately replied that they were unclear or didn’t know. This matter had nothing to do with me, especially in the catering industry. A businessman once went on a business trip and stayed at a well-known business chain hotel at night. It was very slow. I called the front desk. The reply was that I don’t know. Please call the engineering department. No one answered the phone at all. A business hotel is not a business hotel. If you were in a hotel like this, would you go there next time?
The employees of some companies may lack corresponding training and supervision. Some employees even think that doing service work is an inferior job. This kind of mentality and concept has led to a large number of customers of the company. If it is lost due to poor service, a decline in turnover and profits will become inevitable.
03
Employees work half-heartedly and eat up profits
Employees’ work style is procrastinating and their spirits are low. This can be seen in many state-owned enterprises and private enterprises. For example, a famous sock company in Yiwu, Zhejiang Province has lost employees in each department due to disloyalty and team building. They were arguing with each other and the work efficiency was very low. The company also signed a ten-year labor contract with its employees. This seemingly good contract also added several additional conditions: Once you resign midway, you will not be allowed to engage in the knitting needle industry for three years. work, and at the same time pursue legal responsibility.
Some employees have developed a quarrelsome style. They ignore matters that have nothing to do with themselves. The dealers call to ask for replenishment, but no one cares. I am unwilling to go out to run business, because many of the newspaper’s accommodation and travel expenses have not been reported. Although the company is the leader in the industry, due to this reason, a large number of franchisees have been lost, and some regional markets in Shandong and other places have been surrendered to Rising star. The boss is busy making money by going public and engaging in real estate, so he may not care much about these losses.
However, due to such poor management, the losses caused by internal friction will affect the market and partners, and the impact will bring obstacles to the healthy and sustainable development of the enterprise.
04
Product defects, giving up profits
Many companies have good product quality, but they ignore some easy-to-detect details. For example, a famous juice drink launches various types of juices that occupy the best positions on supermarket shelves, but the products packaged in PET are A common feature is that the bottle cap is very difficult to open, especially a 10% orange juice drink. The bottle mouth is very large, but the bottle cap requires a lot of effort to open, and if you are not careful, the juice will splash on your clothes. Some people often encounter this situation when buying this brand of juice, but rarely when buying other brands. It may not be an isolated phenomenon. Later, they rarely buy this brand of drinks. I wonder how many consumers have such an experience?
How would a child feel if he drank such a drink? I wonder if the employees and distributors of this brand drink the juice they produce?
For beverage fast-moving products, the repurchase rate is reduced due to product packaging problems, which brings trouble to consumers, and the losses caused are completely avoidable.
Problems like this are common in beverages. The quality and packaging of so-and-so milk tea, so-and-so oolong tea, and so-and-so milk are declining in direct proportion to the increase in sales. If there are suitable alternatives, will the loyal consumer groups of these brands switch brands?
05
Start a price war at will
Advertising�. Promotional wars, burning profits
The market economy launches price wars, advertising wars, and promotional wars are common business behaviors, but many companies have evolved tactical behaviors into daily Behaviors include long-term advertising bombardment and price dives. Once the frequency of advertising broadcasts is slightly reduced, terminal goods will become unsalable. Once the promotion period ends, sales outlets will be depleted for several months.
As a result, the above behavior continued to increase sales, and the company fell into such a vicious circle that it could not extricate itself. Every time it saw the high advertising fees in the financial statements, And sales expenses, as well as less and less profits, or even loss at a loss, the total profit of China’s entire color TV is less than the profit of Sony’s color TV.
06
Inventory backlog eats up profits
Many companies have good sales and profit conditions, but because their products have obvious off-peak and peak seasons, they bring a large amount of inventory, such as air conditioners, down jackets, blankets, home textiles, and cold drinks, and the inventory that cannot be digested is occupied A large amount of money cannot be invested in reproduction.
This kind of profit is actually only on the books. In order to digest the inventory, discounts are sold at any cost. Even so, there are still a lot of overstocked goods that cannot be digested. For example, although a down jacket company has sales of more than 2 billion, and its annual inventory is 4 to 5 billion, its off-season promotions have limited effect and have become a black hole that cannibalize profits. The balance between production and demand and whether the product itself is marketable all affect corporate profitability.
Faced with inventory and revitalizing funds, all kinds of promotional activities have appeared, including giving away airplanes, villas, and even beautiful women for marriage. The company transfers the inventory pressure to the dealers, and the dealers in turn Low-priced goods are transferred to consumers, which affects the value and reputation of the brand. Consumers also wait and see, waiting for discounts before buying. Companies continue to launch higher-end and newer products to stimulate consumption. They were quickly eliminated and turned into backlog products. This situation continues to happen every day.
As a result, the profits of enterprises are getting smaller and smaller. When the cold winter comes, it is even worse. Enterprises are facing unprecedented tests and sufferings. How can they survive the winter without solid accumulation? After the cold winter, the fundamental core of a company is profitability, and pursuing anything else is putting the cart before the horse. Now it is time to think about the core issue of how to improve profitability. </p
