How to get your business ready for better times
Climbing out of a recession should be more fun than falling into one.
However, getting your business ready for what may be modestly better times ahead isn’t an easy task.
Ÿ Take a good look at your business processes, what your people do and why.
Ÿ Be ready to take a different approach to managing the business.
Ÿ Really look at your financial data, especially sales and margins.
The good news is that three veteran business advisers share their thoughts on steps to take so your business has a fighting chance to be part of what John Lafferty sees as “very gradually better times.”
Lafferty is founder of CFO-Pro, a 16-year old Naperville business that provides on-demand CFO services to small businesses. He’s one of the three. The others are Jim Rudnicki, president of Rudnicki & Associates LLC, a Sugar Grove turnaround firm; and Paul Vragel, president of Evanston-based 4aBetterBusiness Inc.
Vragel is the processes guy. “Even though they have taken a lot of cost out, many smaller business are not necessarily positioned for growth,” Vragel says. “They don’t have scalable systems in place. They see growth, but they don’t have the people for growth.
“They took out the people (and now) can’t add volume without seriously stretching their system.”
Vragel suggests getting employees, top to bottom, involved in what could be a restructuring of how your business operates. “No seminars,” Vragel says of his approach. “We don’t bring doughnuts. We want (employees) engaged, because they’re the ones who know what they do every day.”
Essentially, Vragel begins with what employees do and, with them, develops ways to do things better.
That often requires change, which is something Rudnicki says doesn’t always come easily. “The challenge,” Rudnicki says, “is to get business owners to make decisions that are different from the way they have run the business” in the past.
Sometimes those decisions involve saying goodbye to unprofitable customers, “the ones who always are late paying their bills and always want discounts.”
The decisions often are profit focused. “A lot of businesses are counting on a sales rebound,” Rudnicki says, “but if they’re losing money they need to get expenses in line with revenue.”
Correlating expenses and revenues could involve such tools as a 13-week cash flow forecast or a break-even calculation, analyses Rudnicki says many business owners don’t do.
One problem, Lafferty says, is that “many business owners have trouble coming to grips with what their financial statements are telling them.”
Lafferty looks first at sales — “The line needs to be going in the right direction,” he says — and margin. A business with $10 million in sales that increases its margin just one percent will have an extra $100,000, Lafferty points out.
Ÿ Jim Kendall welcomes comments at JKendall@121MarketingResources.com.
© 2012 121 Marketing Resources Inc.