Tips to help companies gain and maintain an edge

October 28th, 2009

Things are just not what they used to be

There is reputedly an old Chinese curse that says: May you live in interesting times. We are in the middle of it! These are not only interesting times, they are riveting times. The economy is almost unrecognizable and things don’t stop changing. In order to survive in this uncharted jungle, every business owner or manager needs to prepare for the drastic changes taking place. Here are some ideas that may help:

Manage cash flow

Cash flow and financing should be addressed at every management meeting. Monitor management accounts and key ratios regularly to identify trends early, regularly update cash-flow forecasts, build in sensitivity analysis, adjust for changes to exchange rates, increases in raw material prices and shipping costs, and perform key performance indicator (KPI) analyses.

Focus on your margins

Focusing on your margins and cut costs, not prices. A price increase can be the most powerful strategy to improve the bottom line, but in such tough times as we are experiencing, you are not likely to get the benefits of a price increase easily. Instead, you are faced with having to reduce costs to improve the bottom line. Be ruthless in assessing cost structures and key cost drivers. You need to stay focused on customers and not suppliers as your margin source.

Working capital management

Wherever possible, negotiate better payment terms with suppliers. Review your debtors list and follow up on overdue accounts. Don’t be afraid to put customers who don’t pay on hold or consider entering into extended payment terms with them. Control stock levels and review inventory insurance – theft often increases in a downturn.

Don’t forget the customer

Maintain your personal touch with your most valuable asset, your customers. When pressure to stay competitive is at an all-time high, you must be absolutely certain customers get what they want and need. Don’t assume they’re happy just because they’re not complaining.

Reward performers

Look for creative ways to retain top performers on your staff. You may not be able to offer attractive salary increases, but consider offering perks that don’t cost the company a lot of money. Consider things like flexi-time and working from home. If you need to cut staff costs, get rid of poor performers, they take up a disproportionate amount of management time, aggravate customers, squash company morale and drive away high-quality performers.

PR

This is the time to go out and capture the hearts and minds of consumers – new and existing. If you cut advertising costs, you may lose customers to competition.

Watch the competition

Investigate your competition and determine whether you can take advantage. While most businesses are more concerned with focusing inward, a few brave companies will see this as an opportunity to put one over the competition.

Take a critical look at operations

Review and evaluate internal operations, strategic plans, procedures, structure and policies to see how to cut costs, increase productivity and improve fiscal oversight.

This entry was posted on Wednesday, October 28th, 2009 at 6:34 am and is filed under Economy, Employment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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