Many economists and pundits are claiming that the recession is over, although every industry has been affected by the recession in different ways. The pace of recovery in certain regions of the country and for some industries, such as the real estate development and construction, is lagging behind. That said, most experts believe that the economy will begin improving this year. The question is, “Will you be ready?” How can you position your company for growth?
Focus on your customers
Your customers are the reason you exist in the first place. Improve customer service at all levels for your existing customer base. It is not enough to meet your customer’s expectations – you must exceed their expectations! Excellent customer service is your best protection against the risk of losing business to your competition. Look to expand the amount of business you are doing with your existing customers and have them be a source of referral for you.
Expand Market Share
Many companies continue to focus on cutting costs, almost exclusively, and while that is critically important, cost-cutting alone will only take you so far. You must identify and capitalize on opportunities to increase sales and expand your market share. Can you expand your geographic footprint? Are there other potential customers that you need to meet with? Have you identified competitors’ customers who may be looking for a new relationship? Have you adequately differentiated your products and services from your competitors and made your customers and potential customers aware of why you are better able to meet their needs?
Accounts receivable and inventory both decline in value over time. Make sure all customers pay on time in accordance with terms. As you grow you will find cash stretching to cover new business needs. Make sure you control these assets tightly.
Are you measuring, reporting and forecasting cash on a regular basis? Are you modifying the plan periodically for changing conditions? Are you working with vendors to maximize discounts? Vendors can be the key to getting through difficult periods and growth spurts if you have the relationships and trust. Work with your banks and show them your business plan. Explain what type of funding you will need and make sure they understand your story and your business strategy. Make sure they don’t lump you in with their other banking clients, particularly those that may be struggling. Many banks are terminating loan relationships right now, so avoid what could be a financial disaster by ensuring that your bank is part of your team and will continue to support your business.
Target Marketing Expense
Resist the impulse to spend more on marketing without being able to ensure that each dollar spent generates an increase in business. The key is targeting the marketing effort to maximize the return on this investment. Are you generating business from the internet? If so, then consider hiring a firm skilled in improving your Google ranking. Is your company advertising in magazines or newspapers? How do you track the results?
Control Costs and Expenses
The best times to control costs are when you are growing – and when you are not! Examine all costs and expenses by line item. Benchmark your costs against industry standards, and evaluate process flows to eliminate inefficiencies. Challenge all costs, including sacred cows. Bid out all costs on a revolving basis, getting a minimum of three quotes, or expect to pay too much.
Track your Key Metrics and Ratios
All businesses should have a dash board or key indicators to monitor financial performance. For example, what is your cash position per the bank and books? What are your sales today, last week, month-to-date, year-to-date, and as compared to budget? What are your accounts receivable agings and what is the trend? How do you compare against industry averages? Tailor these key indicators for your business and management needs and implement a system to provide the financial data on a regular basis.
These are just a few suggestions that should be incorporated into your annual business plan and strategic planning process. Once established, these should be regularly updated for changing circumstances as plans and actual performance evolve. Such regular planning and evaluation of actual performance against those plans will help you to thrive in the upcoming economic expansion and to take advantage of opportunities to build and grow your business and achieve its greatest level of success. As your CFO Strategies LLC business partner I can help you accomplish these things and more.