Recut the Suit to Fit – Repositioning Your Business to Survive, then Thrive

by Steve Gross

In a lot of ways, we gained weight in our businesses during the last few years, and when the economy changed, we were left with suits (strategies) that didn’t fit, profits that disappeared, and a change in our customers that we didn’t see coming. Like many of us in our personal lives that are exercising again, watching what we eat, and working with a trainer we can use this analogy in our business.

Exercise again- Rethink and re-plan your business.           

1. Take a look at the underlying assumptions of your business that you began with.
   1. Is your market still healthy and growing?
   2. Are your customers going to survive and grow?
   3. Are the customers that you are serving the right customers that need, want, and can pay for what they buy from you?
   4. Are you financed to handle a protracted change or downturn in your market?
   5. Have you automated with available technology to convert fixed people costs to variable usage costs?
   6. Have you become virtual in presence where possible to serve more customers with better reach and support?
2. Redo your business plan with thoughtful analysis and rethinking of every line of the plan.
   1. You will answer the above questions and improve the actions you take to improve your planned activities.
   2. You will choose the best strategy for today and not continue inefficient or ineffective choices of the past.
   3. Break it down into months, and compare your progress each month to your new plan.

Watch What We Eat- Challenging and Reconsidering What we Spend

1. Reconsider all costs, both fixed and variable
   1. Fixed costs tend to be our everyday bills that we have contracts for or do not change monthly based on sales volume.
      1. Rent, leases, utilities, notes, cleaning, maintenance, telecommunications- each of these in different ways can be reduced or renegotiated as pricing for each provider is under pressure and maintaining customers is important to them.
      2. Creative negotiations can result in lower cash flow usually, and reductions of total costs or commitments in many cases.
      3. Service providers (benefits, law, accounting, insurance, and others) are all open to discussions of either lower fees, increased value added, alternative service plans, or combinations of each.
   2. Consider PEO’s (Professional Employer Organizations) to reduce the administrative burden of managing HR, and accessing buying power and availability of high cost benefits, and burden of dealing with Regulatory Requirements imposed and to be imposed by Fed. Government (Health Care, increased regulations and filing costs)
2. Challenge and rethink your variable cost strategies- those costs that directly relate to sales.
   1.  Instead of direct commissions, consider rewarding contributions to gross margin for sales or other programs partnering the self-interest of sales with the success of the business.
   2. Incent directly actions and activities that promote your brand to new markets with measured programs
   3. Revisit and renegotiate vendor pricing and/or terms to challenge them to help you survive.
   4. Reconsider advertising and marketing plans, and rebalance traditional indirect media costs with lower cost digital direct media to increase presence and reach, as well as customer access and service, while lowering overall spend. 

Working with a Trainer- Add Talent, Discipline, and Feedback to your Management Loop

1. Whether you have or don’t have a CFO, everyone is busy- get outside help
   1. We hear from clients frequently that we already do these things, we don’t need help (additional overhead).
   2. We ask the management team how well is it going, and we hear,” We are fighting fires all day, we don’t ever get to stop and evaluate or redo our plans,i t is ready, fire, aim.”
   3. In the same way we don’t need a trainer to exercise, we don’t need one to help manage our business.
   4. In the same way we achieve our physical goals quicker and more effectively with one, a financial advisor can help you achieve your business goals quicker and more effectively.
   5. Our increased income created should be in multiples of money spent on this process. Definitely a Profit Enhancement Project
2. Add Talent- Find the right person with the right skill and resources
   1. A management accountant, experienced CPA, or a retired (or available) corporate CFO could have the experience and skill
   2. He must have access to planning, monitoring, and collaborative technical resources to keep your costs down and value up.
   3. He must listen a lot, and “hear you, understand your pain, and communicate well”
   4. He must also have been there, done that, and understand the difference between bad performance/bad results and bad planning/bad results.
3. Add discipline – Ingrain this Plan-Execute-Evaluate process in the must do’s of the Company each month
   1. A perfect plan never executed is worse than a good plan well executed. Don’t suffer from paralysis by analysis.
   2. Meet every month regardless of conflicting schedules. Use video/audio conferencing for the hour or so you invest and get every decision maker committed.
   3. Begin to use Web Meeting software to familiarize yourself with new means of communicating. You will use it later with clients and team when you get better and more comfortable.
   4. Develop your internal trends over time Year to Year, Month to Month, Rolling 12 months to internally benchmark.
   5. Develop your external trends by locating information about your industry in databases and/or professional trade groups.
   6. Use your Business Plan as a benchmark as well.
   7. Compare activity to all three benchmarks monthly to look for Insights (Areas of Concern that invite Action)
4. Add Feedback- Encourage Critical thinking, but Demand Problem Solving with It
   1. Your best people will have the best ideas, but suggestions can come from anywhere.
   2. Communicate vision, mission, and purpose of the Business to all to let your employees know who you are and where you are going.
   3. Respect Chain of Command, but allow feedback the is constructive to come from anywhere. The worry to protect one’s position sometimes discourages allowing feedback from others.
   4. Constantly challenge the way things are done- Is this the best way, can we reduce steps, could we be more effective?
   5. Discourage problems without solutions- When someone observes or complains, require them to accompany the comment wit a specific solution. This eliminates “Bitching”, an ultimately destructive behavior
5. At the End, Only Corrective Action Adds Value-  Meetings, observations, and plans are only valuable when acted upon, SO ACT and IMPROVE.

Your Trusted Advisors at HLB Gross Collins