Bullet Proof Your Business For 2009
Mar 03, 2009
Strategies for Thriving in a Down Economy
One of the uses of the term "Bullet Proof" is when you train a horse not to buck and bolt at the sound of gun fire. In the outdoors, a horse that is steady when the rider is firing his gun, perhaps at something preying on live stock or even threatening the horse and/or rider themselves, can make the difference between life & death. So too "Bullet Proofing" your business in 2009 can make the difference between the life & death of your business.
Many businesses grow and thrive during bad economies. You may have heard the stories about people in chauffeur driven Cadillacs during the Great Depression, not just the executives of big industry, but successful every day business people, thriving during the Great Depression! So how can you position your company to not just survive, but grow in this economy?
Here are items to consider to ‘Bullet Proof" your business for 2009:
•1) Focus on your customers
Your customers are the reason you exist in the first place. If you are not spending time with your customers your competitor is. Improve customer service at all levels and seek out the customers of competitors who may be looking for a new supplier after the failure of your there existing vendor relationships. Expand the amount of business you are doing with your existing customers too. Stay close and don't allow anyone else the opportunity to go after your customers.
•2) Expand Market Share
Look for opportunities to expand your share of the market. Can you expand your geographic footprint? Are there other potential customers where you need to knock on their door? Are some of your competitors vulnerable and if so perhaps you can acquire their customer list? As the weak companies fall away from the market, there is an opportunity expand your company's share of the market.
•3) Watch Your Accounts Receivable with an Eagle Eye
Accounts receivable can be defined as a financial instrument that declines in value over time. Make sure all customers pay on time in accordance with terms. When cash flow slows down, so do vendor payments, so don't fall victim to the "excuses" about why you did not get paid on time. Learn who does Accounts Payable at your customers, build relationships and use those relationships to get paid on time. Watch for variations in your customers' normal payment routine and swoop in like an Eagle at the first sign of trouble! Proper use of collections can also help avoid losses.
•4) Target Marketing Expense, don't eliminate it
Many companies reduce their expenses in this area just at the point they should be getting the word out about their company to the market place. The key is targeting the marketing effort to maximize the return on this investment. Not all marketing is the same, so critically evaluate what is working and what is not. Generating business from the internet? Then hire a good SEO firm to improve the organic ranking of your key search words. Is your company advertising in magazines or newspapers? How do you track the results?
•5) Bring Training in House, don't eliminate it
Are you trying to reduce training costs? Bring them in house. Many programs can be licensed directly to the company and taught by a facilitator in house. This is the time to invest in your customer service and other training to assure you stay a step ahead of your competition. Use training to create a competitive advantage for you company. People are your key asset, invest in them and treat them as such!
•6) Control Costs and Expenses
Examine all costs and expenses by line item. Have cell phone plans and other telecommunication expenses been review recently? These prices change constantly. Are you taking advantage of cost savings associated with high speed data lines including what can effectively be free long distance? It is a good time to review benefits too. Are you taking advantage of the premium savings associated with Health Savings Accounts (HSA)? Bench Mark your costs, do Process Flows to eliminate lost time. Check the adequacy and cost of your Property and Casualty insurance.
•7) Manage Cash & Working Capital
Working capital encompasses all of the firm's current assets and liabilities. We discussed accounts receivable elsewhere, but do you have a reliable cash forecast? Treat your vendors like customers. They can be the key to getting through tight periods if you have the relationships and trust. Don't ignore your bank / lender or your vendors and don't surprise your banker with "Bad" news. Keep them informed of the good, the bad and the ugly when it comes to your business. If things are tight, go to them with a plan, if things are good, make sure they don't lump you in with their other banking clients that may be struggling. Many banks are calling loans right now, so avoid what could be a financial disaster by assuring your bank understands where you are and where you are going.
•8) Focus on core competencies
What does your business do exceptionally well? Focus on those core strengths and build on them. Assure your customers are the beneficiaries and make sure they are aware of these areas of strength. Now is not the time to get side tracked, rather drive your business with confidence in the areas you know well and the reason your customers do business with you in the first place.
•9) Track your Key Metrics and Ratios
All businesses should have a dash board to monitor key metrics and financial ratios. What is your cash position per the bank and books? What are your sales today, last week, month and year. What is your accounts receivable Days Sales Outstanding (DSO) and what is the trend. Define these items carefully and implement a system to get you the information daily or weekly as appropriate.
•10) Plan for contingencies and avoid the psychology of a herd mentality
Business generally does not go up all of the time. Take time to plan for contingencies. Consider use of 3 budgets, a stretch budget, the most likely scenario budget and a worst case contingency plan budget. And don't just follow the "woe is me" crowd. Yes the economy is struggling, but this provides an opportunity to lay the ground work for and even better tomorrow. Take advantage of the current situation to position your company for a good today and an even better tomorrow.
Yes, you can "Bullet Proof" your business to not just survive, but thrive by taking advantage of the opportunities that lay ahead. And B2B CFO® with over 100 partners across the country and a knowledge base in excess of 2,500 years can help you accomplish these things and more.