Dynamic Business

With an economic downturn still being touted just about everywhere, it’s an ideal time to recap on ‘getting back to the basics’ of good business management practice. Cuts in discretionary spending are not the only measure to keep your business running strong. So what steps can you take to improve your business in a tougher business climate?

When times are good and product is moving, companies can run a little blind. It is not unusual to discover that your processes and procedures have not been monitored as closely or as critically as they possibly could, or should. Reducing costs and overheads is usually the first place to turn to when market conditions tighten. But cost-cutting is never as simple as it may seem. It may even prove counterproductive if it diminishes your competitive edge. Perhaps the first place to look is your own backyard, particularly at the systems that should be providing you with a window into how things really are.

Needed is a real and right time view on all components of the business workflow cycle. This includes stock control, sales, servicing, customer contact, invoicing, financials and reporting. Having accurate information on your costs and production flow allows you to take advantage of opportunities to improve returns from all areas of the business.

What you don’t need is to discover that your picture is only partly right. This can occur when you are relying on information from one operations area and applying it to another when that information is not up-to-date, not coordinated, and not in line with your overall plans. You can eliminate this risk and reduce associated administration effort with accounting and business workflow solutions like Jim2, which provides an all-in-one system that goes beyond traditional accounts information. It simplifies and incorporates all elements of a business into the one integrated information resource to provide an accurate picture on how things really are. So what steps can you take in response to a tougher business climate?

A review of your debtors is always good management practice. When business conditions soften it becomes even more important to be well focused on people who owe you money. Chances are they are facing challenges similar to yours. Look for signs of a customer experiencing cashflow problems i.e. payment cycles growing longer. It may be time to offer customers incentives for keener payment terms.

Avoid non-essential costs. Cost control should be an ongoing part of the management function. Think of each dollar your business spends being just as accountable as an investment in equipment. If your dollar spend is not returning you at least a three-fold return, then chances are you are not maximising its return. You may even be losing money.

Walk the floor. Talk to the people involved in ALL the processes in your business and the users of these processes. Most employees are capable of identifying ways to reduce costs, especially when it applies to their work area. You employed these people because they are intelligent people capable of independent thought; they usually have the answer you are looking for.

Be prepared for an increase in service work. In a softer economic climate, income from service jobs tends to increase as businesses hold on to their equipment longer and opt to have it fixed/serviced as opposed to replaced. Equipment replacement cycles will also lengthen as managers try and squeeze all usefulness out of their assets. Make sure you are geared up to handle an increase in the service side of the business. Managing these jobs will become even more important as essential business equipment will usually be ‘hammered’ and not be replaced as quickly as normal.

Get your back-end systems in order. It is important for your business operations to work as efficiently and consistently as possible.  Be aware of a lack of integration between your systems and the inefficiencies this brings i.e. double-keying, transpositional errors, staff involved in administration who could be deployed elsewhere, and the time it takes to complete tasks. Are there holes that need to be filled: leakage you don’t know about, lost sales, unbilled stock, unbilled hours, and unnecessary costs? What about your stock control systems? Is everything being billed correctly and at the correct price? Is there some stock that is not being accounted for?  Are you accurately invoicing your customers and on time? Are ALL purchases of stock tied to a job? If not, why not?

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