View Mobile Site
 

Ask the Expert

Signal Photos

 

Kenneth W. Keller: Three battles every owner needs to fight and win

Inside Business

Posted: October 27, 2009 6:28 p.m.
Updated: October 28, 2009 4:55 a.m.
 
There are several battles being fought today by business owners and more looming on the horizon.

The first battle is already underway. It is about remaining successful during periods of great change. Owners are going to have to deal with never-ending waves of change coming from both internal and external sources.  

Owners often see a change in status quo as something bad; something might be taken away or unnecessarily added to obligation.

Yet change is how a business adapts and grows.  

Because of their outlook, owners usually see change coming and brace themselves. However, they often fail to do a good job of communicating change successfully to the rest of the people in the organization.  

Hourly employees deal with whatever comes their way. They might not be happy about the change or the method that it was communicated. But they do what is necessary to survive and to stay on the payroll.  

Salaried managers in organizations often see change as unnecessary. These people may have their heads in the sand and may have evolved to have serious entitlement attitudes. Managers who deal well with change survive. Managers initiating positive change and selling it will thrive.

Managers fighting change usually end up working somewhere else.  

The second battle is executing with fewer resources: people, time and money. Layers of management and payroll counts have been shrinking and this will continue. Yet, there will be no reduction in expected results. Doing more with less is now how it is.

Related to the first two battles is the third battle: the battle for cash. While it could be said that banks aren’t lending anymore, don’t blame the bank or the banking industry. The bank is doing what every company should be doing: Focusing internally because that is where the tide of this battle will turn.

Where should the internal focus be? Every employee impacts the company either losing or winning the battle for cash. The challenge is for the owner to explain this concept to the employees and manage the appropriate change in attitude and behavior.

Cash comes into a business when it sells to the right kind of customer. When marketing sends the wrong message to the wrong target market and when the sales department chases the wrong kind of customer, getting cash into the business becomes that much harder.   

The right kind of customer is one who can afford to buy the products or services being sold. The provider must price every product or service to be sold at a profit. When the person responsible for setting prices does their assignment correctly, this helps cash flow. When they fail to do their job correctly, it hurts cash flow.  

When the wrong kind of customer seeks to buy and cannot afford to do so, those in sales often discount the purchase price. This reduces both cash and profits.

Cash comes in when the proper business model is established, ensuring prompt and regular payments from customers who have been converted to clients. Every owner wants clients and should be focusing on improving the business model so that cash comes in on a regular basis.  

When those responsible for delivering or providing products or services do not do so efficiently or at a high enough quality level, it costs time and money, both negatively impacting cash flow. When additional time and resources are spent redoing something because it was not done correctly the first time, it costs money.

When invoicing is done incorrectly, it impacts cash flow. When telephone calls from buyers to sales people or Accounts Receivable related to outstanding invoices are not returned promptly, it negatively affects cash flow.

When an organization has credit policies and procedures and they are ignored, it impacts cash flow. When inventory sits on the warehouse floor, it ties up cash that could be used elsewhere.

When the organization establishes barriers to prevent customers from paying in a manner they prefer, it negatively impacts cash flow.

Today, cash is king. Owners need to explain why this is important and that every penny counts.

Employees understand this at home; they need to be educated as to why it is important at their place of employment.

These battles rage today. Those that win them will be well positioned when the economy turns.    
Today is the time to renew attention to making certain everything possible is being done so that your company will emerge victorious.

Ken Keller is president of Renaissance Executive Forums, which brings business owners together in facilitated peer advisory boards. His column represents his own views and not necessarily those of The Signal.

Comments

Commenting not available.
Commenting is not available.

 
 

Powered By
Morris Technology
Please wait ...