Succeeding or Failing
Ops and fin
Time to play defense!
So times are good. Sales are up. The wind is at your back. The market is doing great. You can focus on offense. You drive forward with more deals and more growth. Profitability is always important. In the euphoria of all the new business coming in we might have not watched our margins closely enough? Cash flow is king, but good cash flow doesn’t mean it’s time to loosen up on collections or margins.
What about the economic downturn? Things are different now. Contracts are getting delayed or even cancelled. Closing rates are going down. We now see and feel the eroding margins and shrinking cash reserves. Growth masks a lot of evils and now the mask is off!
So now your defense may have to carry the team. (Ask the Chicago Bears howto do this). You need to focus on:
Do you know where you’re cash flow will be 2,4,6,8 weeks out? Do you find yourself in a time-wasting panic or struggle? Is your credit and collection system as strong as your sales and marketing system? Is it a closed loop system or is full of holes?
Have you engineered your business for profit or is it the leftover that you hopefully get to take home? Do you know what the profit should be for your type of business and industry? Do you know your net profit by customer? Are you one of the 20% of the small businesses that are making 80% of the profit?
Do you use budgets effectively? Are you controlling costs better than your competitors? How do you measure efficiency? How do your compensation plans relate to a down market? How do you
benchmark what your operating costs should be? Do you find yourself having to cut costs or do
you have effective cost controls in place?
Slashing marketing expenses in a down market is simply not good defense!
COMPANIES THAT PLAY GOOD DEFENSE LOVE DOWN MARKETS. Those owners don’t lose a lot of sleep during these times.
Bernard Kleon, www.coachingassociates.net