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When it comes to developing and strengthening your business, there are key areas where a calculated risk can make all the difference. | Source: Freepik
When it comes to developing and strengthening your business, there are key areas where a calculated risk can make all the difference. | Source: Freepik

Jeweller's management masterclass

Sometimes in business, avoiding change can be the greatest risk of all. SAMUEL ORD reviews the insights of five business experts heading into the second half of 2023.

It’s been a mixed bag for the Australian jewellery trade this year, with successful industry gatherings and exciting product launches juxtaposed against fears around consumer confidence and the impact of rising cost-of-living pressures.

Whether the economic pundits are right or wrong, it’s always worthwhile refreshing your understanding of the fundamentals of running a successful business.

By brushing up in areas such as communication with staff, reviewing your costs, and planning for the future, you can ensure that your business is on the right track.

To ensure that you not only survive but thrive in the months and years to come, Jeweller has consulted five business experts to uncover the keys to strong management while dark economic clouds loom ahead.

Lesson #1 – Review, but don’t slash!
Brian Jeffrey, Quintarra Consulting
Brian Jeffrey, Quintarra Consulting
"If you see tough times on the horizon, plan ahead and be prepared to make difficult decisions when needed if you expect to come out safe on the other side."
Brian Jeffrey, Quintarra Consulting

When times are tough it’s important to examine business processes and revisit costs; however, all too often managers take the easy road and begin to ‘slash and burn’ on expenditures which are crucial for strong sales performance.

In a difficult economy, it’s common for business owners to begin ‘mismanaging’ unprovoked. Brian Jeffrey of Quintarra Consulting says that this is an easily avoided issue.

“Larger companies headed by non-marketing people, such as an accountant, or an engineer, often use difficult trading periods to justify cost-cutting. They terminate training, advertising, staff - anything else they see as a cost to the company. This is a short-sighted view,” Jeffrey explains.

“The problem with cutting costs on advertising, as an example, is that it diminishes visibility in the marketplace. It stops people buying and, as a result, revenue drops further. The powers at the top - seeing less revenue - make even more cuts and the downward spiral goes on.”

When the cost-cutting process turns into downsizing, the wrong people are often released, particularly when the temptation is to fire highly paid sales staff. However, these staff are usually well paid because they have a track record of delivering results – and that’s who you need  when times are tough.

“If you see tough times on the horizon, plan ahead and be prepared to make difficult decisions when needed if you expect to come out safe on the other side,” he adds.

“If you can stay ahead of the curve, even when it’s heading down, you’ll be in a better position to take advantage of the situation when the time comes, and the market improves and sales increase.”

Lesson #2 – Harness the power of silence
Mike Kotsis, GPS For Small Business
Mike Kotsis, GPS For Small Business
"When you allow silent moments in a meeting, you’re also giving your staff permission to speak their minds. It may take some time for ideas to flow but they will come. In fact, you’ll be surprised by the insights that you hear – insights that you never would have had on your own."
Mike Kotsis, GPS For Small Business

When there is regular silence in a business meeting it can been seen as a ‘red flag’ because it means that staff aren’t speaking up or contributing.

If just one person is dominating the conversation most of the time, then the business has likely has the same problem – a lack of input from all contributors.

Mike Kotsis of GPS For Small Business encourages you to embrace the power of silence.

“If you really want to let go of the vine and supercharge your leadership team, then you need to be comfortable with not speaking. Allow silence to happen as your team’s most important work is being done in the spaces where nothing is said,” Kotsis explains.

“When you allow silent moments in a meeting, you’re also giving your staff permission to speak their minds. It may take some time for ideas to flow but they will come. In fact, you’ll be surprised by the insights that you hear – insights that you never would have had on your own.”

If you can't encourage your staff to speak up you’ll never achieve your business or personal goals.

While your staff are processing and offering their thoughts, just listen. Don’t offer your ideas until they are finished speaking.

"A leadership team that doesn’t have the space to process their thoughts internally isn’t leading – they’re following. And a leader who is driving all of the team’s decisions is holding onto the vine," he continues.

"Neither you nor your team can be truly effective without that space to think during a meeting - so shhh!"

Lesson #3 – Learn to deliver bad news
Bri Williams, Founder of People Patterns
Bri Williams, Founder of People Patterns
"Applying this to bad news, the biggest takeaway is to focus on how you make people feel and how you leave them. The criticism you share will likely be the most intense part of the experience for the employee – the ‘peak’."
Bri Williams, Founder of People Patterns

From performance criticism to budget cuts, bad news is a part of the business. It’s important that people in positions of power and responsibility deliver this news appropriately and effectively.

For astute business managers, bad news is more important than good. The latter can send you broke while the latter won’t.

Human beings remember moments of peak emotion and the end of an experience according to psychologists.

Taking advantage of this insight is a pivotal skill possessed by many strong managers, according to Bri Williams, founder of People Patterns.

"Applying this to bad news, the biggest takeaway is to focus on how you make people feel and how you leave them. The criticism you share will likely be the most intense part of the experience for the employee – the ‘peak’,” Williams says.

“To manage their emotional response, be direct and assured, but also compassionate. Remember that you can use positive framing for bad news – something like, ‘this is where I see your greatest opportunity for development’ – to signal your support for them.”

She adds: “The end is also important; leaving the employee with clear examples of what they are doing well means they will have the confidence and reassurance from you to continue to perform.”

Lesson #4 – Plan for the road ahead

Planning for the future, particularly in terms of stock, is a complicated process with many ‘moving parts.

It's crucial your plan includes a pre-emptive and long-range view; understanding that stock flow from one period into the next is continuous.

Susan Martin, founder of Smart In Planning, says it’s also important to develop an understanding of which key performance indicator to focus on and when.

“Planning, by definition, is only a plan. The endpoint is moving, and every decision, every change – whether planned or spontaneous – impacts the future position,” Martin says.

“Deviations from the plan don’t necessarily mean goals can’t be achieved; perhaps you will still hit your targets, just not in the way you originally thought. Knee-jerk reactions – such as focusing on a particular number in isolation, or last-minute clearance sales – can be costly mistakes that are often repeated by retailers.”

Susan Martin, Founder of Smart In Planning
Susan Martin, Founder of Smart In Planning
"Planning, by definition, is only a plan. The endpoint is moving, and every decision, every change – whether planned or spontaneous – impacts the future position."
Susan Martin, Founder of Smart In Planning

Martin encourages you to review four key questions when it comes to reviewing your inventory.

  • What is the profile of your stock?
  • What is the ‘health’ of your stock?
  • What are the levels of your stock?
  • What are the risk and opportunities in your stock?

“I’ve observed that many businesses conduct a basic review, without translating it into a ‘preview’ – an extrapolation of those insights, interpreted into a strategy,” she clarifies.

“For example, if the review reveals performance below target margins, with higher than planned markdowns, a decision may be made to reduce markdowns next season. On the surface, this makes sense; we know that reduced markdowns are linked to higher profits.”

Martin continues: “However, it’s not a straightforward cause-and-effect relationship. To achieve the desired end of higher margins, the business must first correctly identify that high markdowns were the problem, understand why this was the case, and put in place a clear strategy as to how this will be addressed going forward.”

Lesson #5 – Don’t be afraid to take risks

When it comes to developing and strengthening your business, there are key areas where a calculated risk can make all the difference.

Taking a risk is subjective; what one person considers risky another might not give a second thought. As we age, we tend to become more risk-averse, favouring the ‘tried and true’ methods rather than embracing what's ‘new and exciting’.

Business leaders often fear the very opportunities which could dramatically increase sales, according to David Brown, president of Retail Edge Consultants.

“This risk aversion sometimes stems from having previously been financially harmed. We instinctively shy away from previous bad experiences. With too many bad memories returning, we start to believe that the same thing can happen again,” Brown says.

David Brown, President of Retail Edge Consultants
David Brown, President of Retail Edge Consultants
"As it turns out, avoiding change can be the greatest risk of all. Failing to take a chance can be riskier than taking a few calculated gambles – that is, ensuring the risk factor is managed as effectively as possible."
David Brown, President of Retail Edge Consultants

“Yet in many cases, these previous bad experiences were circumstantial and not directly related to the actions that we took. I see this time and time again with jewellery storeowners who stick to the same path of action over and over again even though the market has moved on.”

He adds: “As it turns out, avoiding change can be the greatest risk of all. Failing to take a chance can be riskier than taking a few calculated gambles – that is, ensuring the risk factor is managed as effectively as possible.”

Inventory, marketing, split testing, and price – these are four areas where taking a risk can dramatically reshape your business.

The most important question when considering taking a risk is to determine what the worst-case scenario will be if things don’t go according to plan.

In most cases, you may be surprised to discover the downside is actually minimal.

Not sure where to get started? Consider having a ‘risk budget’ as part of your annual plan and trying something new with these funds.

“In every case, you need to decide if the upside offers a multiplier several times higher than the downside, and whether the downside can be capped at a certain point to minimise that risk,” Brown suggests.

“If you explore these options, you will find that there are many opportunities in your business to take controlled risks that can offer significant upsides – and some of these risks could potentially catapult the business to another level.”

He concludes: “When you assess these risks on that basis, you will find the risk really isn’t that big a risk after all.”

Conclusion

When so many voices of authority are predicting a difficult or at least uncertain year ahead, it can be easy for business owners to make self-inflicted mistakes.

Fortunately, an uncomfortable retail environment is an ideal opportunity to review your approach to managing your business.

Review your business and its process, however; don’t automatically begin making cuts – you run the risk of eliminating something that’s been crucial to previous successes.

Sometimes bad news is unavoidable, so examine the way in which you’ve historically delivered this news to your staff. Are there areas you could improve?

Learn to make the most of silence, no matter how difficult it may be. Ensure that every member of your staff has the opportunity to be heard – you never know what you may learn from what they have to say!

Planning is crucial, particularly when it comes to inventory. How well do you know your stock and are there areas for improvement?

Finally, don’t be afraid to take measured risks as this is how businesses develop and expand.

As we all know – fortune favours the brave!

More reading
Tips for keeping your staff motivated
The challenge of retaining great staff
Why taking risks is critically important
Why understanding human needs is the key to business success
The 10 most important management lessons taught by a business master

 

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ABOUT THE AUTHOR
Samuel Ord

Samuel Ord is a Jeweller journalist covering day-to-day industry news and investigative long-form features. He has over seven years experience as a court reporter and sports journalist.








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