Five practical steps to become ‘recovery-ready’
“Are we there yet?” “Is it really happening?” Any good manager should be asking these questions right now. Although Australia avoided a technical recession, business and consumer sentiment has not been strong for over a year now. That alone represents a major challenge to business owners, or to managers employed in business or government
Whatever your views about these first two questions, this next one is even more important: “Are we ‘recovery-ready’?” Here are some practical steps you can take to be ready to benefit whenever the up-swing starts. Think about how these steps could be adapted and applied to your situation.
Assess your markets
Which customers or which markets have proved more resilient to the recent slowdown? Which markets or customers are starting to ease the constraints? Which markets are the ‘easier’ sells or the natural users of your products or services? In which markets do you have weaker competitors, or a product/service advantage? Your answers will help you to re-direct your energies into the most promising markets.
Assess your products
Check current gross profit margins, and sales volumes, and working capital consumed for each product, service, or group. Determine the ‘stars’ in your range as well as the ‘dogs’. Promote the ‘stars’, because they are more valuable to you and meet a customer need too. Re-engineer the ‘dogs’. Examples might include: increase prices; eliminate unnecessary features to achieve lower sales prices or higher volume; work out if they be produced differently; try to make them more attractive products.
On-sell your ‘fries’
Many firms provide valuable advice or support in the name of ‘good service’. Yet few realise this advice could be packaged and sold when bundled with a related product. Generate more revenue for virtually no extra cost, since your people are already doing the work!
Review your structure
Having decided the key markets and the key products you intend to focus on, put the resources where they are needed to support those strategies. Move people into the right business units or the right roles. Re-focus advertising and promotional spending into those key areas. Engage with the core customers.
It will help if you can align the skills and interests of your people with the functions they work in. That way, time and energy are not wasted in ‘wheel-spinning’ when the focus should be on your customers’ needs. Effectiveness and morale should lift.
Keep investing in the ‘business’
Give yourself or your colleagues some time to focus on the reviews listed above. That investment should pay off, through revenue and margin improvements, or cost savings, or enhanced morale. Test the feasibility of capital investments which can improve output or save cost or save working capital.
See whether your key people need their skills to be enhanced in areas like project management or frontline staff supervision or business/administrative skills.
Hopefully, your business or work group will already be doing well for many of these measures … but there’s often scope to lift performance in at least a few of them. Whether a recovery has started, or whether it is a little time away, act now to make your business recovery-ready. You’ll be more effective, more profitable, and happier when you do!
Ian Brown, B Ec CPA
Director, Corporate Services at UNE Partnerships. Ian is also co-chairman of the CPA Australia ‘Centre of Excellence for Business and Management’
