Welcome to May! It is hard to believe that we are already almost halfway through 2024 and winter has come and gone. I am writing to you today from Winnipeg, Manitoba Canada. We came north of the border to celebrate my stepfather’s 90th birthday.
One of the tasks I needed to complete while here is to go through items from my mother’s estate to decide what I wanted to take home, and to figure out any items that my kids may want. This can be an overwhelming task. Not only do we need to decide who wants what, but we also need to decide how to get those items south of the border.
This task is similar to how you would manage products and services in your business. You need to decide what will sell, how many are needed, who the target market is, how to staff in order to provide necessary services to customers, and more.
When a business is started, many use gut to decide these things, or as I like to call it, the “Ouija board, dart board, Magic 8 Ball method” of business. Then, you would go out and sell what you had. But the world has changed. Next month we will be teaching at a national conference for QuickBooks advisors. One of the classes will be on complex inventory, discussing this very topic.
Today, you need to offer customers products via multiple channels: sales reps, web stores, B2B (business to business) portals, EDI (Electronic Data Interchange), eBay, Amazon (who has three different methods to sell products – and are all very different), etc. are all factors to consider. You may need to be able to drop ship orders from the manufacturer, create special orders for customers, and much more.
Margins in several industries have dropped significantly. In the past, minimum margins on volume orders were quite high. A choice was to sell more at lower margins to cover overhead. A fun story I remember from when I was young was that I saw my dad’s business card that had the title “General Manager”; and I asked him why it didn’t say “Owner”. He explained that when customers know you are the owner, they expect you to make pricing decisions on the spot. Being the “General Manager” allowed him to have to “talk to the boss”.
Gone are the days of managing a business simply with the gut. We need to rely heavily on data, customer trends, product availability, and understating of competition both domestic and international. When using 3rd-party fulfillment sites, you must be aware of the costs involved to make sure you are making an appropriate margin and covering costs. Anyone who has dealt with Amazon FBA (Fulfillment by Amazon) knows these costs can become prohibitive quickly; but today, they are the 800-pound gorilla that cannot be ignored.
Another change: Back in the day, we could go out and purchase QuickBooks Desktop and use it for multiple years to run a business. That is not an option anymore. As of July 31st, 2024 new licenses of QuickBooks Desktop Pro or Premier will no longer be available for purchase. Rest assured, this does not impact QuickBooks Desktop Enterprise; it will continue to be available and is being developed further.
Intuit decided to focus on their QuickBooks Online product as a replacement for QuickBooks Desktop Pro and Premier. It is interesting that they are replacing Desktop Pro and Premier with a product that, at the present time, actually does less. You need to delve into independent 3rd-party apps for several missing critical features. What Intuit has done well is to make it easier for software developers to integrate with QuickBooks Online, allowing 3rd parties to fill the feature gaps, as just mentioned.
Today you need to select the correct operational software to pair with QuickBooks to run your business. At Mendelson Consulting, we have a rigorous software evaluation program that any 3rd-party app must complete before we recommend that solution to any customer.
- What market do they serve? What is their value proposition?
- Complete demonstration of their software from their sales team to our evaluation panel (to understand what our clients will be told).
- A technical review of how their software works, from the database engine to connection with QuickBooks and API (Application Programming Interface), and which other 3rd-party apps they connect with.
- Receive access to their internal training materials so we know what they know.
- Have our technical consultants be part of an implementation to gain a keen understanding of how the solution fits into a customer’s business.
- Listening to support calls to understand the questions asked post implementation.
Only once this is completed will we recommend such an app to any of our customers. This enables us to find the correct solutions to the correct customer for their business needs both today and into the future.
We have heard many stories over the years of failed implementations, or software that is not working as promised. Anyone reading this who has been through a complex implementation knows what I’m talking about. As you are looking for your next software solution, feel free to reach out to us for guidance. As the saying goes, we have been there, done that, bought (and worn out!) the t-shirt.
