Thursday, December 20, 2012

Is Your Business Ready For 2013?

Preparing Your Business for 2013
Change is happening.  The stress we felt in recent recession will hit our businesses again soon.  

Whether this predicted fiscal cliff is a 10,000 foot drop, a bump in the road or someplace in between, business leaders need to be prepared. 

Taxes will increase, legislation will be greater, health care costs will continue to go up, government will get bigger and BUSINESS WILL STILL HAPPEN.

Based on the lessons learned from past economically challenging times, as well as good business practices, let me share with you 5 areas that you can manage in your business to survive and possible thrive.
  • Financial Management. Going beyond fundamental management of your business (income statements, balance sheets, and sales forecasts), I recommend 2 specific things to improve your financial stability: 
  1. Have a strong banking relationship. This goes two ways.  Know the bank you are with is a solid bank. Think about the fallout a few years ago.  Partner with a bank that will be there for you.  Secondly, meet quarterly with your banker to review your business. Share what you have done and what you will do.  This relationship will be invaluable if you need financial assistance from your bank. 
  2. Get your Accounts Receivable balance to zero OR EVEN negative!  How can you get paid before you deliver the service?  Think about magazines. They collect their money and then, over 12 months, deliver your service.  How can your business do this? 

  •  Operational Management. This is where you can make the biggest impact to your survival. Again, I recommend 2 specific actions:
    1. Know what you do and do what you know.  Identify your core services / products and be the best at it.  Don't get distracted by the "shiny new idea".  Focus on your core strengths and commit to being the best at it. Too many times I see businesses who lose sight of their core capabilities and wonder into unchartered waters. More often than not, they sink.  Now is not the time to stray. 
    2. Simplify, simplify, simplify.  Continually ask what you can do to streamline your operations.  What steps don't add value to your service or product? There is a process called "Activity Based Costing".  Ever activity has a cost to it. Find your cost and ask if there is an offsetting value. If not, eliminate it or simplify it.
  • Customer Management. Your customer relationship is the third area of focus. You must create "raving fans" to survive and thrive.  Here are two recommendations:

    1. Sell solutions not products or services. As simple as this sounds, too many businesses sell products and services that they think their customers need. Ask your customers what problems you solve. Ask them why they buy from you?  Know their problems and be their solution. 
    2.  Don’t depend upon a few good customers. Diversify your customer base. If you have more than 70% of your revenue coming from less than 30% of your clients, you are at risk. Find new customers who have the same problem. Can you expand geographically, demographically, gender, ethnicity, age, etc.? How does your solution solve another potential customer's problem? Profile your customers and find a new customer. 
  • Utilization of Resources. Most companies are only using 20-30% of their resources true potential. Consider how much technology is at your fingertips. Besides using it for e-mail, documents and a few basic spreadsheets, most of the potential lies dormant. This is true for most of the other resources in our business - including your people.  What can you do? Here is one simple recommendation.
    1. Invest in resources. Consider where the biggest opportunities are in your business and invest now - BUT measure the results.  Don't assume if someone is trained or equipment is upgraded, that you have solved the problem. Measure the expected performance improvement. What gets measured gets accomplished. This is the only true way to do more with less.
  • Stakeholder Management. This is one of the most neglected asset a company has and yet the one that can make or break a business.  The stakeholders of your business includes the community you live in and the market you serve. Frank Agin, founder of AmSpirit Business Connections and author, once said "All things being equal, and even when they aren’t, people do business with people they know, like and trust." In today's business world, no reputation is a bad reputation. You must pay attention to your reputation and build your reputation. Here is a simple action you can take.
    1. Invite comments. Ask your customers to give you feedback. Online, in writing, through survey cards but you must ask.  If you get something unfavorable, respond immediately. Study after study shows that a quick, positive resolution brings stronger loyalty than all the 'good' service in the world.
FOCUS on these core concepts and you have a better chance of surviving and even thriving during this next challenging time.

Remember this business truth – if someone is buying the products or services you offer, you have a marketplace to compete. Your job is to compete!