Do you really have a handle on the things that cost your business money? Are you as prepared as you need to be to handle incidents? Do you know how to improve your bottom line in this tight economy?
Projections for the rest of 2009 are not good. Job shops aren’t getting orders and they’re failing to hit their production run projections. Schedules are being pushed off a couple of months.
So, how should you spend the rest of the year if you want to remain profitable? As tax partner at Porte Brown LLC, an Elk Grove Village accounting firm that serves privately held businesses, I suggest you:
- Thoroughly review your business processes
- Become willing to reinvent the business
- Get aware of Lean Manufacturing principles, even if yours is a service business
Why You Need to Evaluate Your Business Now
The processes and structures that worked before may not work now in this new economy. You may need to develop new processes or adapt existing ones to meet your immediate needs. For example, your business may benefit from:
- Regular management or employee meetings to report on the status of business activities.
- Tracking systems to ensure that customer requests are received, assigned and fulfilled. Now is the time to improve customer service and increase customer loyalty.
- Quality control processes to ensure that the same high level of customer satisfaction is maintained.
- Incorporating budgeting procedures to ensure that costs are controlled, properly allocated, and charged back to the client, if appropriate.
- A defined process for monitoring receivables and collecting on accounts that become past due.
How to Effectively Evaluate You Business
When you evaluate your business, you want to avoid becoming part of the problem. You want to look out for self-fulfilling prophecies. I’ve seen it thousands of times with my clients –When it’s all gloom and doom, people start pulling back. This automatically leads to even more gloom and doom.
Here’s what you should do instead…
- Take a fine-tooth comb to your business and make sure your processes are right. Put all of your processes into a flowchart. Look at everything you make. How can you do it better? Can one person do two machines?
- Look at your industry’s best practices including: lean manufacturing, accounting and marketing. This is the time to align your business processes so your operation is more effective and more profitable. If you follow this tip, you will minimize waste and reduce inventory.
- Get a handle on which operations are making you the most profits. If you have three different products, or services, put the costs and profits down on paper so you can see them. Allocate sales costs, labor, overhead and other items and then determine which services or products are profitable.
Ultimately, the review may mean you reinvent your business. And, don’t be afraid of reinventing your business.
Why You Shouldn’t Fear Reinventing Your Business
America has reinvented itself several times. You, as a business owner or executive, must do the same thing. You need to evaluate what your business does and reinvent it so you can compete during this down economy.
A review inevitably means decisions. Often, those decisions will involve people. I’m a big advocate of reacting fast. If you feel overstaffed and there’s no light at the end of the tunnel, then somebody has to go – as distasteful as it is.
You often can build back up with temporary help. Temps are good because you can send them home when business tails off again.
What You Should NEVER Cut
When you’re evaluating your business and making necessary changes, there is ONE thing you should not change. Do NOT cut your marketing budget. Cutting marketing and advertising is the wrong thing to do when times slow. You’re already concerned about the lack of new customers. So, if you cut your marketing budget, how do you expect to get more new customers into your sales funnel?
Instead, you should be looking at your business processes and systems. Find out how you can run your business more efficiently and more effectively.
By following these tips you can increase your bottom line, even during the recession. And, if you need help – don’t be afraid to ask the experts!
About the Author:
Tony Massaro, CPA and Partner of Porte Brown LLC, helps small to medium sized business owners evaluate their business and improve their bottom lines even in a slowing economy. To discover how you can remain profitable simply by reviewing your business processes and analyzing how you can manage a more effective and efficient business go to: http://www.portebrown.com