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Ten Steps to Watching the Future
Preparing for challenges in a tough economy
A recent article in USA Today, interviewed a gentleman that was a management consultant to some of America's largest corporations. The premise for the interview was to restate his belief that hard times are soon on the horizon, and list his suggested plan of action. And while the advice was directed to major corporations, the same ideas, in a slightly different version could be applied to small business everywhere.
As you examine these ten ideas, consider the sound advice they represent. Whether the consultant is right, or hopefully very wrong, does not matter. The list of ten tasks represent ideas that a business wanting to start a new year on sound footing would do well to heed.
The consultant's first point was to state you should share your vision for the future of your business. Share your vision, (do make sure it is a positive vision), with your customers, your employees, and your fellow merchants. Everyone wants to be with a winner.
Surely you have seen or heard repeated stories of superstar athletes who have said they would rather have the opportunity to play for a championship as compared to having more dollars while playing for a team that had no chance of winning. Even though you are not a professional sports team, the same rule applies.
The second suggestion was that you communicate with your employees and your suppliers. These two groups of people have a vested interest in the future of your business, and want to see that you are in a positive position in the foreseeable and long range future. If they do not know what is happening they can only assume, and unfortunately they will likely assume the worst.
The third point is to watch for the signs of change in the overall business atmosphere. Ask the grocery store owner or manager nearby, the pharmacist, other merchants in your trade area, as well as other merchants in your industry. Ask the representatives of your vendors. Each of these individuals is in a position to provide you with invaluable insight. See if the trends in their business are similar to those in your business and your industry, and what they are doing to handle the changes.
Fourth, watch your cashflow. The times of tremendous sales increase, as well as down economic times, are equally hazardous times for your cash flow. Lack of cash flow is the number one reason businesses fail, regardless of the status of the economy.
Monitor your cash position for each of the next twelve months. You can get a good idea of where your business is going by examining the financial statements of the last couple of years. You can easily create a cashflow chart which will assist you in making plans so that you can take advantage of all the opportunities before you.
The fifth idea is something that should be done at all times; Spend more time servicing your current customers. At any time, it is an economically sound policy. It costs $20 to obtain a new customer, but only $4 to keep a current customer. Endear yourself to your customers, and they will do likewise.
Sixth, look at the goods and services that you are currently offering. Too often, retailers fall in love with their merchandise. If you have those which were added during the recent months or years, and you have not received the return that you anticipated, it may be time to redirect your finances and time to other more profitable areas.
The seventh idea is an expansion yet a contrast to the previous one. There may be opportunities that your business could consider adding. If you examine some of the best merchants, and the unique product and goods combination that they offer, you will often find that this combination came about when another merchant in town closed or discontinued products or services.
Point number eight is to suggest you review all of your expenses on a line by line basis. Just as you are reviewing the goods and services that you offer, an examination of all expenses, detecting and eliminating all of the marginal ones will do much towards keeping your cashflow in a strong position. If you could eliminate $100 each month from your expenses, you have accomplished the same results for the bottom line of a typical business as you would by increasing sales by $40,000.
Ninth, pay attention to your employees. While we have already discussed keeping them in the communication loop, this may be an ideal time to show your support to them by making sure that they have the appropriate tools to complete their tasks. Creating, or updating your incentive programs for your employees is an excellent way of showing them that you are a team and that you value their efforts.
The tenth idea is to review the methods you use for ordering and receiving your goods. Examine the hypothetical supply pipeline, and make sure that you are maximizing the "just in time" theory. This is not to suggest that you begin to decrease your inventory levels. Steadily decreasing inventory levels are a sure sign to customers and employees that there is reason for concern.
If nothing else, with the unsettled financial markets that have existed since last summer, this is an opportune time to take this ten point check of your business to make sure that you are financially strong for the opportunities that are before us, and financially solid for the amount of time they will last.
This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
Profits Plus Solutions, Inc.