Robert Suastegui is the Vice President of Sales and Executive Business Development at KMM Telecommunications, Inc. KMM is a leader in providing services to the telecommunications industry for both wireless and wireline. KMM’s services include supply chain, inventory management, logistics, engineering and integration and deployments. Prior to joining KMM, Suastegui held different roles in the sales and finance organizations at Motorola, Inc. He was Motorola’s director of finance for their Mexico subsidiary based in Mexico City, and then moved on to the role of Asia Division Financial Controller based in Singapore. Suastegui’s last position in the finance organization at Motorola was as worldwide controller for one of their business units.
Suastegui shares the top five areas of finance that are important to the small business bottom line.
(Photo courtesy of Robert Suastegui)
The key point to pricing is that the marketplace establishes pricing — your cost structure does not. Many small business owners make the mistake of pricing their goods and services based on their cost structure. However, that strategy can be fatal if your resulting market pricing is 30 percent higher than your competitors.
Supply chain impact on cost of goods sold
Cost of materials or services is a major area of cost reduction opportunity for many companies. The best way for small companies to reduce their cost of acquisition is through a continuous bidding process. Large companies obtain bids semi-annually, some quarterly, for their largest purchases.
Most companies can reduce their facility costs by simply outsourcing this function. Specifically, there are many warehousing and logistics companies that can offer storage at reduced rates because they leverage their facilities with other customers. This is an area of opportunity that many large companies take advantage of and many small companies do not.
Cost impact of a direct vs. indirect sales model
Selling costs are another example of costs that can be outsourced to indirect sales channels. There are a number of companies that exist to sell products for companies. They are typically paid a percentage of revenues. This is a good way to quickly expand a small company’s selling footprint without hiring direct sales people.
General & administrative
The major advantage that large companies have over small companies is that they have the resources to track productivity data and financial metrics. Small companies could improve their financials by simply tracking relevant data. For example sales/headcount, revenue/square foot, detailed inventory turns, profitability by product, cost reduction history, competitive product analysis, etc.
This article was written by Michelle Guilbeau of Examiner.com for CBS Small Business Pulse.