Customer Service For Small Business

Ilya Leybovich of Thomas Net Industrial Market Trends recently wrote "Good customer service can mean the difference between a solid client base and losing market share".

Customer service is an important strategy for increasing sales and improving customer loyalty since it is less expensive and easier to keep existing customers than to acquire new ones.

One important aspect of customer service the customer service level, which is often expressed as ratio or percentage of the number of orders completed on time to the number of orders placed. For example, 0.97 means that 97% of orders can be filled immediately from available stock, which includes safety stock. The safety stock quantity is inventory in excess of forecast demand that is kept on hand to avoid stockouts and to maintain a high value of customer service.

According to a survey of 800 Supply Executives all over the world by Aberdeen , typical customer service values can be categorized as follows:

• Best in Class (top 20%) 0.97
• Industry Average (middle 50%) 0.85
• Laggards (bottom 30%) 0.71
  

An ineffective or unsatisfying customer service experience, including a late or incomplete delivery, can often drive clients away from a business and give it a negative reputation, ultimately hurting the bottom line.

While one might assume that increasing customer service comes at a cost, that is adding more safety stock, the study by Aberdeen suggests otherwise:

• Best in class companies typically have 9 times the inventory turns of laggards and 2 times the industry average.
• Best in class companies typically have 1/4th the logistics costs of laggards and 1/3rd the logisitics costs of the industry average.

In other words, by making smarter inventory decisions, best in class companies are able to provide better customer service at a competitive advantage.

Unfortunately, small businesses have not had the tools to make smart inventory management decisions so that they can implement an effective customer service plan. Kathy Yakal of PCMAG highlighted that "QuickBooks can help you determine how much inventory you have on hand and when it's time to reorder, but how do you decide how much to keep around so you neither run out nor keep so much in stock that it's not cost-effective?" In other words, QuickBooks has no capability to set customer service levels.

In fact, of the many QuickBooks add-ons that help with administrative inventory tasks, Phitch OC 9.0 is the only one that actually determines the best amount of safety stock to meet customer service objectives. In other words, Phitch provides today's small businesses with the capability to implement customer service objectives that was once only available to large companies with expensive systems.

ePhiphony Incorporated has created the ultimate inventory optimization application for small business accounting software - Phitch OC 9.0. The platform includes powerful tools that help maximize economic profit, which has mostly been for large companies that can afford costly systems. Economic profit properly accounts for all the complex trade-offs involved in inventory decisions.

SBA:Taxes Vary By Entity = Not All Inventory Is The Same

Inventory is one of the largest investments made by most businesses, yet today's software packages treat the inventory of all businesses the same, often using arbitrary settings or outdated models developed in 1913. Not all businesses are the same, and their decision on how much to invest in inventory is more complex and should be based on each specific business entity.

In order to optimize inventory at the business entity level, a metric that is capable of incorporating business entity variability must be utilized. One such variable is economic profit. Economic profit is defined as the the net operating incomes after taxes minus the cost of capital. Economic profit is much more capable of weighing the complex decisions involved with investing in inventory as it impacts both the income statement and the balance sheet.

Economic profit is capable of weighing each business entity type by weighing their tax rate and their cst of capital. For example, a study by the SBA showed that the effective tax rate by business entity type:

• Non Farm Sole Proprietorships 13.3%
• Partnerships 23.6%
• S Corporations 26.9%
• C Corporations 17.5%
• All Small Businesses 19.8%

The study by the SBA also showed that the effective tax rate varied by industry, for example Sole Proprietorships varied as follows:

• Agriculture 11.7%
• Mining 12.7%
• Utilities 4.1%
• Construction 13.1%
• Manufacturing 12.5%
• Wholesale & Retail Trade 14.2%
• Transportation & Warehousing 13.3%
• Total All Returns 13.3%

The point to stress is that taxes vary and consequently not all inventory is the same. It should be managed accordingly. In fact, inventory can often mean the difference between success and failure. According to SCORE , using data from the SBA, nearly one-third of businesses fail within two years, and two-thirds fail within seven years. In his book Small Business Management, Michael Ames reveals that inexperience and poor inventory management are among the top reasons for small business failure.

Between the lack of experience and the access to appropriate technology, small businesses have not had the tools to make smart inventory management decisions. That is where ePhiphony Incorporated's patent pending solution, Phitch OC 9.0, comes in to guide small businesses to optimize their inventory at their specific maximum economic profit.

Not all businesses and their inventory decisions are the same. In our whitepaper "Doing Business Globally" we highlight the impact of not only tax rate but the cost of capital. Phitch OC 9.0 provides an easy to use interface that provides the wisdom to guide today's small business to optimize their inventory and peak financial performance.

By optimizing inventory at their specific peak financial performance, businesses can reveal hidden wealth that is needlessly tied up in inventory.

A Formula For Small Business Survival and Success

Phitch OC 9.0 Affiliate Program With SBDCNet

ePhiphony Incorporated is proud to partner with SBDCNet to provide a formula for success. A formula that optimizes inventory at peak financial performance to reveal hidden wealth. Hidden wealth that could potentially be utilized to secure additional funding to further stimulate growth.

Inexperience and Poor Inventory Management = A Formula For Failure

Inventory is one of the largest investments made by most businesses, yet it is often overlooked as an opportunity to stimulate growth. In fact, inventory can often mean the difference between success and failure. According to SCORE , using data from the SBA, nearly one-third of businesses fail within two years, and two-thirds fail within seven years. In his book Small Business Management, Michael Ames reveals that inexperience and poor inventory management are among the top reasons for small business failure.

Phitch OC 9.0 = A Formula For Success

Between the lack of experience and the access to appropriate technology, small businesses have not had the tools to make smart inventory management decisions. That is where ePhiphony Incorporated's patent pending solution, Phitch OC 9.0, comes in to guide small businesses to optimize their inventory at peak financial performance.

Phitch OC 9.0 Features and Benefits

Phitch OC 9.0 is the only solution in the marketplace today that optimizes inventory at peak financial performance.
►Reveal hidden wealth tied up in inventory
►Improve customer service
►Stimulate Growth
►Generate a report to measure performance and results
Featured in PCMAG and The Progressive Accountant

Purchase Phitch OC 9.0

ePhiphony is proud to partner with SBDCNet and provide a 10% rebate on Phitch OC 9.0 to all affiliates as a way to help more small businesses succeed. To redeem your rebate, enter "SBDC" in the VAR field when you click on the link below and fill out your order form.

http://www.phitch.com/SBDCNet/tabid/84/Default.aspx