- Take The Finance Strategy Test (March 2011)
- Thrive In Turbulent Times - Growth Out Of Recession (March 2011)
- The Very Useful Financial Strategy Model (March 2011)
- The Ultimate Power of Credit Agencies - Businesses Watch Out (December 2010)
- How To Avoid Profit Flat-Lining (December 2010)
- Networking with the Cleaner - Your guide to improving your networking skills (July 2010)
- Budget – Broadly Welcome But What’s To Come? (June 2010)
- Planning and Budgeting Into Intelligence (April 2010)
- Recession Proofing: Your Relationships, your business, your reputation (January 2010)
Thrive In Turbulent Times - Growth Out Of Recession
Growth in the UK is likely to be modest for some time to come, so you cannot rely on ‘business as usual’ to see you through. Sticking to the tried and tested methods in which everyone stays busy keeping everything the same can be fatal. In fact some businesses are so busy doing this, that they risk losing financial control.
Businesses that survive and grow out of a recession tend to invest time and energy in three key areas
1 Focus on your existing client base
Remember, you are trying to attract great clients not chase them. By lowering your price, prospective customers tend to start focusing on your cost rather than your worth; don’t start emanating a desperate vibe to the marketplace.
Can your clients describe you to you? If they can’t then they won’t be able to describe you to a friend. As a business, you are at your highest level of refer-ability during times of uncertainty in the marketplace. The best way to convince new prospects to use your products/services is to spend more time with the people who are already convinced. In times of uncertainty in the market, many of your competitors are neglecting their clients as they attempt to actively recruit new business. If a client truly believes in your services, the likelihood that he will recommend you to his friend is extremely high.
2 Use your skills in the right place, or get the skills you need
When the economy gets bad, many business owners tend to lose all discipline and focus. They tend to go after everything, diluting their already limited resources by trying to do too many things or being all things to all people. The problem is that even well established companies are unlikely to have all the skills and insights necessary to achieve growth tactics in a recession. Many MDs have, until now, operated as the company’s ‘financial director’, but the prevailing climate creates unusual challenges that they simply don’t have the experience to tackle in the optimum way.
Smart MDs realise where their weaknesses lie and will seek a finance director expertise to support and direct the business, especially to establish a sound strategic plan needed to trade out of recession.
A recent example is the MD of a retail company in [KENT} who brought in an FD to help the company through ‘a rough patch’. Through this action it avoided being dragged down by a related company that needed to be liquidated. This [KENT] business is now set to double its profits – a remarkable feat to achieve within 12 months.
What business need to is take a step back from the daily grind and really think where you need to go. Ask yourself: Is there one element of the business that is floundering? Perhaps you need to cut this loose, perhaps you need to restructure or sort out cash flow to facilitate a recovery or change direction. However, the key is not to make these decisions solely on the back of your balance sheet and the businesses financials.
Trying to tackle financial challenges without the ability and skill to look beyond the figures can simply provide a short-term gloss-over of the real issues. To devise the best strategy for growth for your particular business, you need to look at the entire business and the sector it operates in, in its entirety. You need to recognise that as a business you may not have the skills to do this internally or indeed through your current financial accountants. This really is the realm for an experienced finance director. Hire it, find it, out source it – just get the best advice from the most experienced professional.
3 Looking beyond the balance sheet
In a buoyant, growing economy where demand runs ahead of supply, it may pay to hunt as an indistinct member of the pack. But not during, or in the wake of, a recession. In this environment you have to offer something different. The businesses that prosper in these circumstances are those that will add value to their customers – not by cutting the cost, but by enriching the product, service or experience that they provide and setting out a key financial growth strategy to achieve this. The success stories of this decade won’t come from organisations that employ me-too, best-practice techniques but from those that identify new, previously unforeseen needs and innovate relentlessly to create solutions that are unique.
Businesses need to shift mindset from simply cost cutting and internal focus to a growth strategy where the entire business and its operations and the market are reviewed altogether. Simply focusing on the figures from your finance department or the analysis your accountants provide you with are not enough. There is an entire world if information around and behind this. By digging deep into your business and looking at everything on the horizon you will be able to start thinking and prioritizing differently. With this change in mindset needs to come a change in how you plan, invest and spend.
The future of business will be defined by organisations that constantly innovate, stay their clients and realise when to bring in professional help. Not by businesses that fail to realise and act on the gaps in their internal expertise.
- Focus on your existing client base
- Use your skills in the right place, or get the skills you need
- Looking beyond the balance sheet
(Clive Newell, March 2011)