6. January 2010 by Dan Trudell.

Are you happy there?

Every day, you can find a range of views on business and the economy. Some indicators e.g. stock market, point to an improving situation. Others, e.g. employment rates, point to a different reality.

Regardless of the source, ultimately, the bottom line is how your business is doing…is it thriving (growing) or just surviving (no growth).  A recent research report (Aberdeen Group, Dec. 2009) based upon over 1200 respondents pointed out one key difference between the no growth companies and high growth companies. Those that reported High Growth are 1.5 times more likely to be creating new sales channels or expanding existing sales channels than their no growth counterparts.

Further, the no growth/slow growth group was almost 2 times more likely to be concentrating on cost cutting than the High Performing companies.

No matter which pundit is correct regarding economic recovery, the gap is widening between those companies that are aggressively pursuing new opportunities in the market and those that are treading water. Continuing to “drift and float” while waiting for economic recovery may put a business at serious competitive disadvantage.  The gap between the market leader and followers may be difficult if not impossible to overcome.

What is a business to do? In uncertain times it can be difficult to know exactly what to do and as a result do nothing. The research shows several steps that are low risk and can position a business for greater growth in the short and long term.

• First, analyze your business relationships with key customers. Are you a “preferred” supplier? Are you at risk? Do you bring value to them?
• Second, analyze your sales team. Are they hungry for new business? Or does the reward structure provide more than adequate compensation without the incentive to grow their accounts or territory?
• Third, are new products and services being developed? Have strategic partnerships been created to share/spread the costs and risk? Have new sales channels been developed?

Peak Performance Associates, Inc. is focused on helping companies understand where they are now, where they want to be in the future and implementing actions to drive the change in people and processes to move in that direction. Contact Dan at dant@peakperform.net or call 608-835-9288 to sign up for a FREE Growth Audit. There is no cost or obligation for this analysis. Based upon the outcome, you will have a clear understanding of your current state and possible alternatives to move forward.

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18. May 2009 by Dan Trudell.

In my last post, I suggested several “price” related ideas to keep you and your business financially solid during these challenging times.  These focused on the revenue side of the equation; raise prices, negotiate multiyear contracts and mine existing customers.

In part 2, I want to suggest three more methods you can easily implement to improve financial performance and cash flow.  The old adage that “Cash is King” has never been truer!

Strategy 4- Accelerate receivables

If you currently offer open billing terms to your customers and client’s, implement a “pay on completion” discount.  A 2% incentive for cash on completion can be beneficial for both you and the client.  You don’t need to send invoices, make collection calls and most important, you have cash NOW! Your internal bookkeeping workload is reduced as well as costs.  The client saves money and must ultimately pay anyway.  Set your business up to accept credit card payments if you haven’t done so.  This can also aid in accelerating the cash to cash cycle!

Strategy 5- Reduce ASSETS

Most businesses accumulate an excess of idle, infrequently used assets, whether it is parts, supplies or equipment.  All of this may have been useful in the past.  However, if it is parts and supplies that have not “turned” in the past 6-12 months, consider taking a deep discount to move it out. If it is capital equipment, can it be sold or scrapped?  Auctions, Craigslist and other surplus outlets abound for disposal of these items.  In my experience, these assets will just continue to devalue over time while taking up space and time to inventory.  The “rainy day” when that item is needed often never arrives.  Having a portion of the value back in cash reduces the need for borrowed funds and simplifies life in general.

Strategy 6- Improve and document work processes

Are your best people able to do more work and generate more billable revenue?  If so, do you know what they are doing differently to get work performed more efficiently?  The easiest way to increase profitability and cash flow is to document best practices.  Train others on those best practices and insist that they implement them all the time.  Create a checklist, either paper or electronic, of process steps for the most common jobs or projects and have it completed by for each job.  This can also serve as a quality monitoring system to verify for the customer that the work contracted for was fully completed. Productivity of the rest of the group should improve close to the level of your best performers within several months of implementation.

Conclusion

Sustaining and growing your business in good times and bad is always a challenge.  If you work on both enhancing revenue, improving productivity and increasing cash flow, you can thrive in the tough times and move out aggressively in the market when the economy recovers.  Knowing what to do is the easy part.  It takes leadership to sell these improvements to your people and your customers/clients. The question remains the same; do you want to stay in business?  If so, be bold and take action.  If not, well, the choice is yours!

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4. May 2009 by Monica Le Grand Trudell & Dan Trudell.

As we write this article, it is baseball season. Imagine, if you will, a team of excellent, talented players; athletic and skilled at their respective positions. One might predict much success based upon that scenario. But further imagine that while they are skilled in the basics, hitting, running, etc., they don’t have a solid understanding of the rules of the game! Would that change your outlook for how successful this team will be in season play? 

We find the same scenario occurring in business after business today; highly skilled and talented “players” in each area, but without the critical understanding of the fundamental rules of business. Those fundamentals include a basic knowledge of the “cash to cash” cycle, the basics of operational decisions on the financial success of the business and how important it is to understand how each functional area or department “fits” together for organizational growth. 

And in today’s difficult economy, it becomes more important than ever that each and every person in your company understands exactly how your business makes money, how what they do on a daily basis, contributes to the bottom line and how the decisions they make impacts the profitability of the company, keeping the company strong enough to weather difficult times.   

Here are several questions to ask yourself to determine if developing the business acumen of your employees would be beneficial to your business: 

1-      Are you asking your people to do more with less?

2-      Is competition getting tougher?

3-      Are key decisions being made at lower levels in the company?

If so, do the frontline folks in each department or functional area that you depend upon to make the best decisions for both the company and the customer have a solid understanding of the foundational business basics to make optimal choices? Do they have strong Business and Financial acumen? 

Many of our clients have concluded that they have been putting those critical frontline folks at a disadvantage. They realize they have neglected to provide them with the knowledge to make good business decisions. Manufacturing Reality^TM: Ca$h Flow^TM addresses that missing component. By working in teams, running their simulated manufacturing business for 3 years, they make decisions and very quickly experience the impact of those decisions both operationally and financially. They must manage their cash, make tough choices about how to invest their limited resources and quickly learn that “there is only so much money”!  Through discussion and debrief, they are able to make the connections to how the decisions they make on a daily basis impacts the financial success of your company.  

Often, we are asked how a company can justify the investment in this type of learning exercise. I ask in response “What is the cost of sub standard or downright wrong decisions on a weekly, monthly or quarterly basis?” What would it mean to a company if your frontline workforce had a better understanding of how your company’s operations and their decisions improved the cash to cash cycle, why it is important to control overtime, how much waste impacts bottom line performance, etc. The answer to those questions in dollar terms usually far outweighs the investment in your people. The simulation experience will drive behavior change and enhance the quality of the hundreds of decisions that are made every day. Ultimately, the cumulative effect of all those decisions drives improved financial performance. 

And isn’t that the goal? 

Dan Trudell and Monica Le Grand Trudell are partners in Peak Performance Associates, Inc.  Since 1990, Peak Performance Associates has aligned the people strategy with the business strategy of client companies.  For more information on Manufacturing Reality^TM:  Ca$h Flow^TM or how we can assist you with aligning your people strategy with your company strategy, please contact Dan Trudell at 608-835-9288 or dant@peakperform.net.

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