Promotional Consultant Today

Prosper During A Recession
     The mere word "recession" triggers fear of the unknown. How bad will it get? How long with it last? What should we do? If these are your reactions, don't feel bad. These fears are normal when facing unpleasant events of unknown severity and duration.
     The biggest mistake you can make is to act too slowly, but it's also important to act with carefully considered intent.
     The second biggest mistake is denial: "This can't be happening; it can't get any worse." Yes, it is, it can and it probably will.

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TOP SHELF TIP NO. 60
"A mind, like home, is furnished by its owner, so if one's life is cold and bare he can blame none but himself."
Louis L'Amour, American author, 1908-1988

     The third biggest mistake is to become defensive and reactive. When this happens, you will always be a step behind the competition -- and a step late in meeting your customers' needs.
     Promotional Consultant Today is looking at steps you can take to survive a recession, and dominate the competition. Yesterday we discussed customers, products and expenses. Today we'll look at cash flow, headcount and lowering the breakeven.

     Cash Flow: Watch cash flow like a hawk. Make a spreadsheet projecting cash flow 13-plus weeks out, in detail. Collect fast, pay slow; take only the big cash discounts. Use checkbook-style, open-to-spend processes, starting with how much you have and then deducting items as you spend. Stop spending before cash runs out.

     Headcount: People are usually the largest cost (after purchased materials) in a business. People don't just cost wages and benefits; they spend money and consume resources. Carefully evaluate your people.
     Sort them into four groups: Great -- these are the keepers, and tell them so; Good -- you want to keep them, and tell them, too; Fair -- questionable; Weak -- under-performing or unnecessary, and you should cut them now. Find the ones in the Fair group who can grow into Good, and work with them. Cut those who can't grow, or won't grow, along with the Weak ones.
     These groupings have nothing to do with organizational rank. A great customer service rep might be far more valuable than a fair senior executive. Weak or unnecessary people in high paying positions should be cut first. Next, cut excess people added during the good times.

     Lower The Breakeven: Classify expenses as fixed or variable. Variable costs (expenses) go into every product or service. Fixed costs are determined by decisions about the business' structure and size.
     In a weak economy, expect volume to drop -- this means you must cut fixed costs fast, and resize the business to the market. Pricing must recover variable costs, and contribute to covering fixed costs, (sales, general and administrative costs), interest, and hopefully, yield a profit.
     Getting through a recession is like getting in shape after gaining weight. Exercise -- make the right moves. Eat properly -- selling the best products, to the best customers. Don't quit when the going gets hard. Running a business is supposed to be hard; if it weren't, everybody would be doing it.

     Source: John L. Mariotti is the author of eight books business books and hundreds of articles and columns. He serves on several corporate boards, advises companies and does public speaking. The former president of Huffy Bicycles and Rubbermaid Office Products Group, he is president and CEO of The Enterprise Group. His newest book is The Complexity Crisis-Why Too Many Products, Markets & Customers Are Crippling Your Company -- And What To Do About It.