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Posted: 09 December 2020

Every Question Should Lead to a Service Engagement

Business Advisory Services Updates

Now is the time for accountants to be having a cup of coffee with SME clients to help set the business’ strategic plan for 2021.

Some of the questions that you could ask include:

  • What are your top 5 sales lines?
  • What mark-ups do you make from these products?
  • What are your bottom 5 sales lines?
  • What mark-ups do you make from these products?
  • Do your team members know the composition of your stock so that they could identify:
  • “Star Products” – these are the items that you sell a lot of and have a high mark-up?
  • “Cash Cows” – these are the items that you sell a lot of that have a low markup?
  • “Problem Lines” – low sales but reasonable mark-ups?
  • “Dogs” – low sales with low mark-ups? You probably should be avoiding purchasing these items in the first place.

Do you know what your “lock-up” is?  (The number of days from the time that you paid for the stock until you get paid for it).

The engagement from these questions would relate to a retail analysis evaluating the product mix and targeted mark-ups – will these generate enough gross profit for the business to trade profitably?

Every Question Should Lead to a Service Engagement

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