We are all facing the same challenges; including your customers, employees, competitors and suppliers. A down economy actually provides us an opportunity to identify initiatives to generate cash flow.
Start by brainstorming NOT cutting...
Get your most important asset, your team together. Without them you cannot retain and build your client list. Follow these action steps:
- Commit to continued customer service. We typically react to an economic downturn by reducing inventory and cutting staff. You have a golden opportunity to gain market share and maintain sales volume over your competition by delivering stellar customer service.
- Hire the top talent and develop your team. Many companies reduce pay or bonuses or increase workloads, creating a pool of unhappy candidates. This is your chance to hire top talent that wasn’t available before and provide the training, which you didn’t have time for.
- Focus on your top performers. If a layoffs must be done. Use recent employee reviews and customer surveys, to determine the poorest performers.
- Reach out to your clients. Because of generally lower demand, suppliers are more anxious to find new partners. Ask your clients what they need, partner with suppliers and approach vendors that ignored you in the past.
Then, use a Process Approach to Deliver Improved Customer Service and Cut Costs.
During a downturn, cost cutting is more critical than ever. Most managers start looking at the income statement for the last quarter to identify operating expenses to cut. Many companies, however, have already tried this traditional approach and are looking for new ways to find cost savings.
At HRC-Partners, we help our clients by using a process approach to cut operating costs. Instead of looking at costs from a financial accounting standpoint ("we're spending too much on office supplies"), the process approach looks at activities and examines their value ("do we really need to make photo copies of each packing slip?").
An easy way to do this is to physically follow a customer orders all the way from intake to inventory shipment. Look for activities that don't add value to your customers or could be streamlined. This approach is a simplified form of the analysis used in activity based costing and re-engineering.
· Document the way the process really happens, not the way it should happen.
· When in doubt, choose error reduction over speed.
· Consider using a "fresh set of eyes" to examine your processes. A consultant can recommend best practices from other companies and industries.
Well-selected and executed initiatives can generate positive cash flow in weeks. The key is to find opportunities that start saving money (or improving sales) as they are implemented.
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