The question raised by the Wall Street Journal to 5 consulting experts was what advice do you have for small business owners trying to survive in this economy. For the complete article please click on the following link:
It has been my experience working with a large number of clients in retail (apparel, restaurants, convenient stores, drug stores, automotive, motorcycles,general merchandise), manufacturing, distribution and construction clients that very few have an effective revenue building process in place as well as disciplined management control system. None of these points were printed by the WSJ. In all fairness to the consultants interviewed, I know editors do not always write what is said and what is said can be taken out of context.
The following are my comments posted at the Wall Street Journal with additional points for clarification in parenthesis.
It is rare for advisers to focus on the opportunities for growing revenue and in most cases the opportunities are huge. There are proven tools and techniques that are often ignored. (The tools I was referring to are : specific plan to grow the profitability of existing customers, direct mail, email marketing and the effective integration of a website, blog and video) Companies do not survive long term with a “cut costs mentality”. When a business is run with the right management system there really should be very few costs to cut in the first place. If there are, then take action right now and strengthen the controls that allowed that spending to occur in the first place.
Focus on asset management is always essential and particularly true in a weakening economy. A company with receivables and inventory should spend more time addressing and implementing actions to minimize the risks of not collecting amounts due and for resolving any slow moving inventory. (I always guide business owners with AR and Inventory to establishing the right credit policies and buying practices to begin with then have a disciplined monitoring system in place.)
The advice to tie a percentage of non-sales related employee compensation is generally theoretical except for executives and management. (I am an advocate of pay for performance particularly for the higher paying positions in the business.) As for Lines of credit, it is true there is increasing risk of those being cut or eliminated. There is also a risk that bank debt will be accelerated particularly if there are areas of debt covenant non-compliance. If credit is key to company operations, an aggressive evaluation of all means to strengthen liquidity is needed and that process should already be in place. If not, begin today. (Surprisingly liquidity management is often much weaker in most companies that one would expect. This is normally the first step in any consulting engagement where increased business performance is the goal.)
Bottom line advice: general guidance provides a framework for the enhancement of a detailed control system specifically designed to strengthen revenue, profits and liquidity.
Sending all my readers the energy of wellness, peace and abundance
Steve Pohlit, www.StevePohlit.com
Steve is the President of International Business Consulting Resources. His firm specializes in guiding companies to rapid increases in revenue and profits with a sustainable growth rate. Don’t miss my FREE Report: How To Make More Money With Your Business Now and Long Term I am building my practice and welcome new client inquiries. Call me for a fee consultation at 727-587-7871