Optimize your Business

The time is now. Every business owner/manager is seeking ways to improve their operational efficiency, customer service, and ultimately their bottom line. I am going to use the next couple of posts to discuss the strategy I feel you need to be following - not only to stay in business during this correction, but to be prepared for when things turn around.

Today’s post is a bit long but it’s an overview of the strategy I feel is crucial for businesses in this economic correction. I don’t view these 5 tactics as a cafeteria menu of options but rather a required battle plan in the overall strategy. Your goals should be easy to articulate – survive and be ready for when the correction is over. Over the next couple weeks, I will expand on a few of these in greater detail.

1. Focus on your core competencies, period - Right now, you and your team need to be doing what you know best to make your company the most money (manifested as cash flow). This is not the time to be distracted by anything that keeps you from that goal. As a business owner or manager, look at what you spend parts of your day on that are NOT directly making you money. Do something to push those tasks or issues off your plate. If you get tied up in the mechanics of trying to generate payroll, manage email/computers/phones, write financial/sales reports, or deal with a myriad of other headaches, look at outsourcing it.

Outsourcing doesn’t have to mean going offshore. There are hundreds of thousands of people and companies right down the street that you can hire to manage your non-core competency distractions at a very reasonable rate. Heck, that’s what I do every day for clients. You get an expert at whatever function you outsourced at a consistent, reasonable cost. More importantly, you (and your team) get to focus all your energy on driving your business.

2. Reconnect with every customer you did business with last year – It’s generally accepted that the cost of getting new customers to the cost of keeping customers you already have is a 5-1 ratio. This is a powerful business multiplier that can’t be ignored. Now is the time to redouble your efforts to build, rebuild, or improve your relationships with your customers. Of course, for some of your customers, it will always be about getting the best price regardless of the relationship. If you can offer that, great! If not, it is the solid relationships you nurture now that will drive your company later.

Unfortunately, for the companies out there that don’t currently have or maintain good relationships with their customers, it’s probably too late. Companies that offer mediocre or poor customer service are usually the first ones cut in a correction. All you can do is change your focus now to begin building for the future.

3. Be obsessive about your operational data - I am never surprised when I talk with clients and they say they really don’t have a grasp on their operational data. That data for any business is a constantly moving target that needs to be managed with good organizational process. Prospects, customers, inventory, what sells, what it costs to make a sale, even receivables and payables – these are the key data points that can crush a business if they are not properly managed.

When I ask a client “what’s your best seller (or best customer)?” they can usually tell me. But when I ask them “what does it cost to prospect, nurture and close the sale, not the margin on the item (or service) but on the sales process?” they have a hard time answering. When we break it down, we often find that the effort to get the sale exceeds the margin. Fix the process, the margin, or product. Not your core competency? Outsource it.

4. Communicate your ideas and plans with your staff and key (strategic) customers - I have seen, time and time again, that rumors are always much worse than reality. Everybody is worried and a little freaked out right now. Your staff is concerned about their jobs; your customers are concerned about their business (and trying to do business with the right companies); your suppliers are concerned about keeping your business and getting paid.

I am always flabbergasted by companies that don’t communicate with their employees and then are surprised with the outcome, complaining that turnover is so high or their staff isn’t motivated or loyal. Wake up people! You can’t run a business in a vacuum, if you got lucky enough to hire quality people, involve them!

5. Don’t scrimp on Marketing, be selective but go at it as hard as you can - It is an unfortunate statistic that when faced with a downturn (or correction), many businesses cut their Marketing budget first. This is a great article about Marketing in a Downturn that says it better than I could. The only thing I would add to this article is to leverage a good business process that allows you to QUANTIFY expenditures and results.

How about creating a customer referral program? You may be surprised at how many of your customers know other companies that could use your services or products. Reward them for bringing you business; you already reward your staff – don’t you? If you are taking good care of your customers, this can be an easy Marketing win and a profitable source of new customers.

Batten down the hatches, circle the wagons, focus! Are the tactics and overall strategy a bit overwhelming? Let me help you focus on your core competencies. Contact me at info@KenFarmerConsulting.com.