Pro's advice: look at reinventing your business

Tony Massaro has some suggestions about how we should spend the rest of the year: Review your business' processes, he says. Be willing to reinvent the business. Be aware of Lean Manufacturing principles, even if yours is a service business.

A tax partner at Porte Brown LLC, an Elk Grove Village accounting firm that serves privately held businesses, Massaro starts our conversation with a useful reminder that most suburban businesses "had pretty decent results for most of the year." But he adds that slowdowns have been a topic of discussion during client year-end tax accounting and planning conversations.

"Projections for 2009 are not good," Massaro says. "Job shops aren't getting orders or production run projections. Schedules are being pushed off a couple of months."

The first task as you evaluate your business may be to avoid becoming part of the problem.

"Look out for self-fulfilling prophecies," Massaro says. "When it's all gloom and doom, people start pulling back" which leads to more gloom and doom and people - well, you get the idea.

Instead, "Take a fine-tooth comb to your business," Massaro advises. "Make sure your processes are right. Flow chart your processes. Look at everything you make. How can you do it better? Can one person do two machines?

"Look at industry best practices," Massaro continues. "Look at lean manufacturing - or lean accounting or lean marketing or whatever you do. This is the time to get the processes down, to align processes (so your operation) is more effective and more profitable."

(Lean manufacturing principles seek to simplify the manufacturing process, minimize waste and reduce inventory. Elements of the lean techniques can work almost anywhere.)

Your analysis should provide "a handle on which operations are making you profits," Massaro says. "If you have three different products, or services, put the costs and profits down on paper so you can see them."

Allocate sales costs, labor, overhead and other items, Massaro says, and then determine which services or products are profitable.

Ultimately, the review may mean you reinvent your business.

"America has reinvented itself several times," Massaro says. "Each business must do the same thing - evaluate what it does and reinvent itself to (better) compete."

A review inevitably means decisions. Often, those decisions will involve people.

"I'm a big advocate of reacting fast," Massaro says. "If you feel overstuffed, if there's no light at the end of the tunnel, then somebody has to go - as distasteful as it is.

"You often can build back up with temporary help." Temps are good, Massaro says, because "You can send them home" when business tails off again.

In a similar context, "Don't cut the marketing budget," Massaro says. "Cutting marketing and advertising is the wrong thing to do when times slow."

Questions, comments to Jim Kendall, JKendall@121MarketingResources.com.

© 2008 121 Marketing Resources, Inc.