|
Business owners of an established company recently
asked my firm for help after two years of declining revenues. Their
business had racked up significant debt. Because of a few late
payments, interest rates on their credit card debt approached 30
percent. The owners had reacted to waning profits by putting more time
and personal funds into their business, doing what they had always
done, but expecting a different outcome. They were now contemplating
adding new products in existing outlets, hoping for a moneymaker.
Doing more of what isn’t working or striking out
in many possible directions at once - hoping that something will click
- is unlikely to help. To succeed in volatile times requires focus,
discipline and commitment.
Take an objective look at your company and its
market.
-
Assess the relative profitability of each
product and service. Tally all costs associated with each, including
a reasonable cost for owners’ time, even if uncompensated. Apportion
overhead costs reasonably, perhaps as a percentage of sales.
Systematically answer these questions: What’s making money? What’s
dragging down the bottom line?
-
Consider your company’s strengths and weaknesses
and how it compares to the competition on products, service, price,
and other factors that determine whether the customer buys from you
or the other guy. Don’t forget to involve employees, vendors and
customers in this assessment. What you don’t know can hurt you.
-
Think about threats and opportunities. How do an
aging population, two working parents, increased use of the Internet
and other trends impact your business? If consumers aren’t buying
new, is there an opportunity for increased business from repair or
parts?
Create a detailed, measurable plan to guide
your company.
Reconsider the 4 P’s of marketing – product,
price, promotion and place–focusing on only products and services with
good potential for increased sales at good margins.
-
Price your product above the fully allocated
cost of goods sold, plus a reasonable profit, but remember the price
ceiling is market value. Are any of your products and services
unique? Don’t let a formulaic cost-plus approach blind you to profit
potential.
|
-
Define your target customers; plan promotions
that catch their attention. Don’t restrict yourself to traditional
advertising; consider co-marketing, sampling, and event sponsorship.
Evaluate whether a Web presence or improvements to your existing Web
site could make a significant difference. Is your business present
where your customers shop?
-
Size your company to operate efficiently. Stop
activities that aren’t part of the plan. A line of business that
generates great cash flow, but poor or no margins is hard to
abandon. However, unless you can significantly lower cost and/or
increase price, you may not have a choice. How much time and energy
is spent performing unprofitable work? How much money is tied up in
inventory, parts and equipment? Make a plan to transition to more
productive activities.
Determine how to track the impact of planned
changes.
Pick measures that are easily understood and
represent actual progress. Measure at intervals that allow enough time
to see differences yet avoid drift. Commit to sharing results (good or
bad) with employees.
Based on results, make needed mid-course
adjustments.
If your plan calls for sales of $50,000 a
quarter and you’re at $5,000 after a month, decide whether to stay the
course, increase efforts, change the plan or lower expectations.
Be patient and stay committed; it takes time to
change a business.
Take heart from positive changes, even if they’re
small. Each step helps build positive momentum. Be the champion of
change; keep your employees and yourself focused.
Volatile times can offer opportunities.
Smaller, focused businesses can often take market
share from large, complacent competitors. Well-run, established
businesses can benefit when unfocused competitors go under, thinning
the competitive landscape. Make a commitment that your company will be
among those that prosper.
Laurie Breitner, principal of Breitner &
Associates, has 27 years' experience assisting organizations with
strategic planning, change management, organizational development and
operational improvement. She can be reached at
Laurie@breitnerandassociates.com
>
Return to Home Page
|
