A Challenging Time
A challenging time for business can be the best time to secure your long term future and prosperity. It is even more important to be smarter than your competitors.
If one company takes action to respond to the situation and one company just hopes for the best, who is the most likely to survive and be ready for the upturn?If you want to do nothing and hope for the best, don’t read on. You will have plenty of time for reading when your competitors manage the downturn better.
So where to start. Take a look at the world around you and assess the risks. What is the effect of a downturn going to be on those areas that affect your business:
Sales & Marketing - Redouble Sales Effort
Sales are the lifeblood of your business but a lot of MD’s/Owners do not like the sales side of business and rather let it happen. Not anymore. Good salesmanship is not actually that difficult. It is mostly common sense - know who is buying and not buying. Talk to the ones who have not placed an order this month and understand why.
Is there any fundamental change likely in their buying pattern?
Do you know how much share of business you have with each of your customers?
Can it be increased?
It is much easier to get business from existing customers than capturing new ones. Are there some obvious customers who you do not trade with?
What about an action plan to start a dialogue with them?
Is your service good?
What can you do better?
Examine your pricing. When did you last increase prices? You may have to find the courage to put prices up but if you don’t - Are there some low cost marketing actions that you can do?
Websites are not expensive and can replace expensive and quickly out of date brochures.
ACTION STEPS
- Put a Sales & Marketing Plan together now
- Review your pricing strategy
- Sell, Sell, Sell
When times are good we all get into a "nice to have" syndrome. Things get added because we think it might make life easier or better. In tough times decide what is really essential and what can be done without.
Look at your headcount. Make a 10% headcount cut part of your contingency plan. Usually there is someone whose performance is not satisfactory but the issue has not been tackled. If they need to go, should you start the process of removing them anyway? Make sure you use an HR Specialist to help with this. It can be done but has to be done correctly.
Often things can be made simpler and better. Time for radical thought. Look at how you’re doing things and see what can be done to improve effectiveness and efficiency.
Usually the people doing these things know most about them. So if you have staff involved in these activities get them involved too. Set up improvement teams. Give the projects titles and make a fuss of them. Review them regularly. Do it now while you still have the luxury of time and cash.
Communicate with your staff, management team, customers, suppliers and other stakeholders to keep them informed of what is happening with the business.
ACTION STEPS
- Review your staffing- consider outsourced services
- Reduce inefficiencies and waste in your business
- Implement good, operational business processes
Finance - Cash is King
Cashflow has to the number one priority. If you run out of money the business is dead and all the hard work you have done is down the pan. And maybe your house with it! So do you know your break-even? Do you do a monthly cashflow forecast for the next 3 months?
These are two essential measures of the health of your business. If you do have them, we would recommend you start to do them right away. Most businesses know their costs base pretty well and what orders their customers are likely to place in the next month.
Forecasting sales for months 2 and 3 can be more difficult. Moving annual totals come highly recommended to cover the future trends in sales. You will quickly spot the turning points when sales go flat and subsequently start to turn down.
Clearly if the sales trend is down and approaching your break-even you need to take action. If you are not in this situation you should at least have a contingency plan to reduce costs. You also need to know how long these are likely to take to come into effect. It takes time to reduce costs. Your cashflow forecast can be used to see how this works.
Review your credit control processes. Do you get a signed order for everything? Do you get proof of delivery for goods? Make sure you have processes in place to follow up quickly with late payers.
ACTION STEPS
- Review your cashflow now
- Look at cost reduction and where savings can be made
- Focus on getting money in that is owed
Conclusion
The old adage "failing to plan is planning to fail" is so apt for recessionary times. So start as you mean to go on. It’s easy to make lists, much harder to actually make things happen.
If you’d like some help with this give us a call and we’d be delighted to help. You’d be surprised what can be achieved in a short space of time.
And how much more gets done with regular review dates with us to help you make sure that you really do implement your action plan.
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