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Quality - Your Ace in the Hole

General Business News

August 2006

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Quality - Your Ace in the Hole

Over the years, many companies have touted the quality of their products and those with the loudest voices have often been manufacturers. After all, itÂ’s fairly easy to come up with measures for products that you make; how long a product lasts and how many returns you have are common examples. The fact, though, is that quality is everyoneÂ’s business. From the one-person hot dog stand to the multinational conglomerate, quality plays an important part in the success of every business. LetÂ’s take a few moments to discuss why your business should care about the quality of its products or services and how you might go about assessing your current performance.

Why do I care about quality

Imagine that you are in retail and you have had your most successful Christmas ever - and it was. Also be the best one ever at home. Heading back to work on the day after Christmas, you are feeling on top of the world.

First one customer comes in with the Barky Dog that drove your sales this season, complaining that the thing wonÂ’t work. Even with new batteries (and dad actually following the instructions), thereÂ’s no tail wagging or barking coming from the toy. It seems the dog is not only playing dead, but is dead. Of course, you refund the customerÂ’s money and go on about your day. The manufacturer will cover the cost of the return and youÂ’ve only lost a little profit.

Soon, a second customer arrives and is angry that Barky wonÂ’t do back flips like your sales associate said he would. About the only flipping at the customerÂ’s house on Christmas morning was his childÂ’s because Santa brought the wrong thing. You make a mental note to talk to the sales associate, if you know who it was, and refund the customerÂ’s money with a profuse apology. You even offer to sell him the model his child really wanted at a discount, but he walks out muttering something like, "Fat chance IÂ’m going to buy something from this place again."

Throughout the day, more Barkys are returned because they are broken or donÂ’t work the way you or your staff said they would. By closing time, youÂ’re ready to head home, climb into bed, and pull the covers over your head. Your "successful" season has become a disaster.

Was your difficult day because of bad luck or was something else at work? There could have been some bad luck, but more likely, you are looking at several quality issues that took some joy from your Christmas season.

In some cases, quality is outside of your control. Take, for instance, our old friend Barky. If he was returned because he didnÂ’t work right, thatÂ’s a manufacturerÂ’s quality issue and you would at least have the satisfaction of being able to return the merchandise and get your money back. But, some things are under your control when it comes to transacting your business. WeÂ’ve all heard the saying, "Good help is hard to find," but it is imperative to the survival of your business to find the right person for whatever job you may have. This is one way your customers will know that you care about them, no matter what your business is. And, if you really care, they will likely want to do business with you again.

So, how do I assess quality?

So how do you assess your level of quality? There are many ways to determine where your business is on the quality scale, but they boil down to looking at the processes in your business, assessing quality, recognizing the positives, taking steps to fix problems, then following all that work up with a reappraisal of how well your "fix" worked.

Business processes - All business processes have some bearing on your profitability, from the guy who cleans up at night all the way up to the CEO. Everyone contributes something to the business. Take a look at your major income producing activities first. If you are a manufacturer, how are you making your product? Is there a better, faster way to build it? If so, will it likely result in fewer returns? Service businesses, like CPAs, all have some process they use to provide their clients advice. What is your firm doing right now? Can it be done quicker and more accurately? In retail, what process are you using to turn that browser into a customer? Is it working?

Assessing quality - The first question to ask yourself is how you define quality. Are too many items coming back for repair before the warranty period expires? How does your client feel about your service? Do they look at you as a friend or more as a ‘necessary evil’? What is your rate of return clients? Does Fred come into your store because he knows your people will help him find the right tools? How many repeat customers do you have?

Assessing the quality of your business will entail not only internal measures, like keeping statistics on the number of errors you note, but external measures as well. Ask your customers how you are doing. I donÂ’t know about you, but I have so many store receipts asking me to fill out a survey, I may never get them all done. Once you define quality, there are numbers of ways to score yourself on how you are doing.

Fix problems - Have you ever seen a company spend a ton of money on consultants and nothing changes? Why is that? It could be that management doesnÂ’t like their ideas, or maybe they expect the line worker to fix the problems. If management does no embrace the changes that need to be made, and champion them through the process, no amount of quality assessment will help improve your business. Make sure your employees see you walking the same walk you are asking them to take.

Reappraisal - WouldnÂ’t it be wonderful if every decision you made to fix a problem was the right one? Even better, wouldnÂ’t it be great if everyone followed your directions? In a perfect world, maybe, but not in this life. ThatÂ’s why you have to constantly monitor the results of your actions to see if they produce the quality improvements you want.


This monthÂ’s article is intended only to give you broad ideas and remind you that, no matter what your business, quality control should be an integral part of it. Are you facing some of these issues? If so, give us a call and letÂ’s kick around a few ideas on how you might be able to improve your level of quality and your bottom line.

Have a terrific August.

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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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