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

Why Many Small Businesses Fail - Poor Inventory Management

Since the U.S. Small Business Administration is working to stimulate the creation of new small businesses by increasing the percentage of the gaurantee to 90% and to reducing the fees, it is a good time to reevaluate the high failure rate of small businesses. According to SCORE, using data from the SBA, there were 637,100 new businesses, 560,300 business closures and 28,322 bankruptcies in 2007. Of these businesses:

• Two-thirds of new employer firms survive at least two years,
• 44 percent survive at least four years, and
• 31 percent survive at least seven years.

What is striking is that these findings do not differ greatly across industry sectors. In his book Small Business Management, Michael Ames gives the following reasons for small business failure :

1. Lack of experience
2. Insufficient capital (money)
3. Poor location
4. Poor inventory management
5. Over-investment in fixed assets
6. Poor credit arrangements
7. Personal use of business funds
8. Unexpected growth
   

This blog highlights poor inventory management as a cause for business failure. Between the lack of experience and the access to appropriate tools and technology, small businesses have not been able to make smart inventory management decisions.

For example, QuickBooks, one of the most popular software packages for small businesses to manage finances and inventory, can help determine how much inventory a business has on hand and when it's time to reorder, but it does not provide the intelligence to help businesses decide how much to keep around so they neither run out nor keep so much that it's not cost effective. In other words, the inventory capability provided, while providing a great start in establishing accurate records..., the existing tool relies on manual settings of inventory levels. When combined with lack of experience, this often results in poor inventory management.

Kathy Yakal of PCMAG highlights how small businesses use a new QuickBooks adjunct to not only manage their inventory but optimize their inventory at peak financial performance. Kathy Yakal notes that of the many QuickBooks add-ons that help with administrative inventory tasks, Phitch OC 9.0 is the only one that actually helps optimize inventory at maximum economic profit. Economic profit, which is a measurement of the economic value of an investment, can better weigh the complex tradeoffs involved with purchasing inventory.

So what does this mean for the small businesses? "By maintaining optimum inventory levels and order quantities, Phitch OC 9.0 may readily reveal a 15% improvement in economic profit over the conventional methods, providing businesses with hundreds of thousands if not millions of dollars in real and measurable benefits by simply changing the rhythm of when and how much inventory they order," says John Krech, President and founder of ePhiphony Incorporated.

In other words, not only does Phitch OC 9.0 provide the wisdom to not only manage inventory but to optimize it at peak financial performance, but it provides a much needed stimulus by revealing wealth that is needlessly tied up inventory that can be better utilized to help a small business survive those first critical years.

A new magic formula - could it lead to the rebirth of software consulting

Daryl Mather of Consulting Pulse has appropriately pointed out the dealth of software consulting due the loss of the magic formula: scarcity and value (http://tinyurl.com/dj68pr). With the economy desperately seeking a stimulus, the industry is poised for an innovation that could be the rebirth of the industry.

While ERP solutions are abundant, they are using analytical methods developed in 1913 to minimize variable costs. Inventory is one of the largest investments made by most businesses yet the decision strategies utilized have gone unchanged for essently 95 years. An opportunity to make over the business models employed is beyond ripe.

Paul Brown of the New York Times recently stressed "in tough times, nothing is more important than making sure enough money is flowing in" (http://tinyurl.com/cgpazp) It is time to utilize a balanced strategy that weighs both cost and cash in today's ERP systems. "Economic profit, also known as Economic Value Added or EVA, is just the metric to weigh the complex decisions involved with inventory from an investment perspective", says John Krech, President ePhiphony Incorporated.

Dick Johnson of IR Cafe recently discussed EVA in his blog (http://tinyurl.com/atlfal ) and highlights that "other metrics like free cash flow and even return on capital can create perverse incentives for managers". While companies using EVA as a performance metric have outperformed their competition by an average of 49% (Stern, J.M. 2003. The EVA Challenge: Implementing Value-Added Change in an Organization. John Wiley & Sons), it has not been utilized as a metric to manage inventory. That is until 2008 - with the release of ePhiphony Incorporated's patent pending solution - Phitch OC 9.0.

Kathy Yakal of The Progressive Accountant recently covered Phitch OC 9.0 as a tool for consultants to help clients to optimize inventory (http://tinyurl.com/afjx5y). Kathy stresses that "there’s only one adjunct QuickBooks program that accomplishes such a feat ....in order to optimize your company's investment in inventory".

"Consultant's now have a unique tool that is the only one of it's kind that provides value by generating a report to demonstrate the change in economic profit" says Krech. At a time when only of 37% consumers consider software company claims to be very or even somewhat believable (Rosen, E. 2000. The Anatomy of Buzz. DoubleDay), ePhiphony delivers it's mantra to reveal hidden wealth.

In addition to providing a magic formula for the consumer, the formula must also apply to the consultant. The old ERP model is built on increasingly complex systems that take a huge effort to implement and are often over budget and fail to deliver expectations. The old formula has been motivated to reward extensive requirements for installation and training.

For example, Oliver Marks of Future Changes recently stressed that "when a software company sets up a consulting operation, it’s serving its own self-interest...." (http://tinyurl.com/cgpazp). In other words, vendors have been motivated to escalate service requirements and expenses. In another example, Gene Marks of Business Week highlights that "vendors seem to go out of their way to make learning to use their applications overcomplicated and expensive" http://tinyurl.com/crwnz2.

"What is needed is formula that is designed from a green perspective in that it leverages existing systems, that can be implemented quickly and effectively. ePhiphony Incorporated specializes in developing ERP compatible software. Phitch OC 9.0 is compatible with QuickBooks Premier and QuickBooks Enterprise and we are working on Versions MicroSoft Dynamics and SAP.", say Krech. "Our model is to design software that can be installed and implemented in a number of hours - not days, weeks, or months. We want consultants to implement their sales cycle quickly but return on an annual basis to implement continuous improvement and added features at an exception value".

Consultants for ePhiphony receive commission for each year that a license is active; however, each year is based on bringing continued value. $1,597 per user buys you the first year’s license, and year two costs $377 per user. A free trial is available, as is a weekly Webinar -- visit the site for details. A combination of a short sales cycle, continuous value, and continuous revenue is a formula for success for consultants.

The Progressive Accountant covers inventory optimization in QuickBooks

The following is a copy of Kathy Yakal's coverage of inventory optimization in The Progressive Accountant. Click on the link to read the article by Kathy Yakal of The Progressive Accountant, which is a brand of Progressive Media Group and is dedicated to providing the information, insight and analysis that business executives need to succeed. Article link

Title: Help Your Client Optimize Their Inventory: Phitch OC 9.0
Written by Kathy Yakal
Monday, 09 March 2009 01:25

There are plenty of QuickBooks add-ons that help your clients manage their inventory, but wouldn’t it be nice if they could optimize it, maintaining an inventory balance that maximizes economic profit?

There’s only one adjunct QuickBooks program that accomplishes such a feat. Phitch 9.0, from ePhiphony Incorporated, uses patent pending technology to determine inventory alerts, reorder points, safety stocks, and order quantities at your point of maximum economic profit, in order to optimize your company's investment in inventory.

Phitch works with QuickBooks Premiere and Enterprise, and founder John Krech is working on versions for SAP and Microsoft Dynamics. Setup and integration are easy, as is regular use; color-coded flags indicate when inventory needs attention.$1,597 per user buys you the first year’s license, and year two costs $377 per user. A free trial is available, as is a weekly Webinar -- visit the site for details.

About the Author:

Kathy Yakal has been writing about personal and business technology since 1983, as an editor and writer at COMPUTE! Publications. She writes frequently for The Progressive Accountant on technology topics.

PCMAG Covers Inventory Optimization

The following is a copy of posting by Kathy Yakal of PCMAG

http://blogs.pcmag.com/atwork/2009/02/phitch_oc_90_optimizes_invento_1.php


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?
Phitch OC 9.0, a new software product from ePhiphony Incorporated, helps you keep that balance in a fashion that will maximize economic profit. Of the many QuickBooks add-ons that help with administrative inventory tasks, it's the only one that actually helps optimize inventory.
Economic profit, which is a measurement of the economic value of an investment, can better weigh the complex tradeoffs involved with purchasing inventory. "Right-sizing" this investment, without compromising service levels, provides management with a beneficial way of increasing return and freeing needed capital for expansion and other strategic investments, according to ePhiphony Incorporated.
Setup and integration with QuickBooks Premier or Enterprise are easy, and the company recommends you use the software at least once a week. Output is simple: color-coded flags indicate the state of your inventory, and signal your reorder point.
"By maintaining optimum inventory levels and order quantities, Phitch OC 9.0 may readily reveal a 15% improvement in economic profit over the conventional methods, providing businesses with hundreds of thousands if not millions of dollars in real and measurable benefits by simply changing the rhythm of when and how much inventory they order," says John Krech, President and founder of ePhiphony Incorporated.
The first year's license costs $1,597 per user, and $377 per user for year two.