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Get Your Company Leaner for 2012

5 Dec, 2011 By: Chris Polek imageSource

Get your company leaner in 2012.With the onset of “the economic recession” in 2008, with still flat projections from economists today, most companies have been forced to streamline their overall operations across the board, running their companies leaner than ever before. Downsizing and cutting back is initially painful, yet many companies have discovered that they’ve been able to accomplish more, get good results - with less.

Some of these same business owners are saying, “I really should have known to run my company this lean, even when times were good!”

Leaner Than You Think

Lean is good. This we know. But how do you know if you’re running your company “too lean”? A really basic indicator is when you first start hearing your employees lament and complain. Personnel are sensitive to change and are a good barometer of day to day activities. Typically, the “workload” or job duties increase for staff once you’ve streamlined your business, yet if you’re not hearing any of your employees complain, then it’s a good sign that you can run your company even leaner.

What about areas that you don’t want to cut back? Like the resources that help keep customers happy - and grow the customer base. We all can grow the share of our existing customers - or add new ones - I advocate doing both.

Also, when it comes to your top performing people, and those who are always loyal through “thick & thin,” don’t cut back on those dedicated employees where possible. Support these people and give them plenty of recognition. Outside of this, most everything else should be considered discretionary costs.

You need to relentlessly run your company lean, even during the good times. This will allow you to be productive and efficient. You can build reserves to be prepared for the tougher times.

Customer Loyalty

Do you give real reasons for your customers to continue to do business with you? And do they (not will they) give referrals? If you can answer yes to both of those, that is the definition of a loyal customer. You need to guard those customers with whatever it takes! And, do you keep track of the customers that you lose versus the ones that you keep? If not, you need to take immediate action on doing that, and resolve to improve that number in 2012 from where it was in 2011. It is not just about finding customers, it is also about keeping them happy with your services. The more customers that you can keep improve serving, the better your chances for overall growth!

Identify Your Company’s Top 3 Goals/Objectives

If you want your people to be accountable, it will never happen unless they are measured against goals. The goals need to be specific. Increasing revenue in 2012 is not a specific goal. But saying you will grow revenue 10% in 2012 is, as is identifying the “Top 3 Critical Goals” for 2012. When you, make them specific everyone in your organization knows what they are, and what is expected from them. You want to do that so your employees won’t spend time working on things that are less important. Don’t forget to ask key managers to detail “How is your department helping us achieve our critical objectives?”

Managing Employee Performance

I believe most organizations have a few employees that just can’t get things done as effectively as we’d like. Unfortunately, in leaner times you have to deal with that problem head on. If you don’t, you end up increasing your overhead cost structure. When the economy is flat, you look at downsizing your work force, validating those that are strong performers vs. those that “just show up” to work. Be tough on performance; make it clear what needs to be done and when - and the consequences if objectives are not met. For those dedicated employees that strive to build your company with you, make sure you take care of them along the way.

Accuracy of Sales Forecasts

It’s a big endeavor – and often a struggle - when annual sales forecasts are created, and for some who’d rather “project” than commit, they are off target. When a forecast is too far off the mark it creates hurdles to making future, credible investments in the company as you can’t be sure of the actual outcome. Gambling with your numbers is not good business. It’s poor planning. We all know it is paramount to have a specific sales process in place, with accountability measures that are intended to have all your sales people driving the same process so that they can consistently hit their/your numbers.

Accounts Receivable

Particularly when times get tough, you are going to have to deal with companies that are slow paying, and you have to remember that you are not the bank. It is important for your customers to pay you on time.

Start by inspecting all the invoices that go past the 89th day, because once an invoice hits 90 days, that spells trouble! Look for the reasons those invoices are getting to 90 days, and make sure that your internal processes are not part of the problems why those invoices are that old; and start solving those problems. Once you have done that, start targeting the invoices that are at 75 days, and go through the same process. Then target invoices at 60 days. You can see the direction we are headed. Remember: You are NOT the bank!

Sales Productivity

When you break it down, sales is all about the numbers, and you want to be as productive as you can be. You need to know at a moment’s notice which people on your team are on target for their quota or not, so that you can work consistently to hit those quotas. Senior management should be involved to help close important new business. Consider matching your sales reps with the type of customers that best equals his/her ability to “close,” so your staff is only pursuing business that they can win.

Employee Productivity

Most of companies really don’t measure employee productivity well, whether they have 10 or 100 employees. However, for most companies, some of their larger expenses are employee related. What is one key area of knowing just how effective each of our employees is? It’s through their productivity. But measuring productivity without the right goals makes little sense. Make sure that you have those Top Three Critical Goals in place and aligned, so that your employees are always working on what matters most – their own, and the company’s, productivity…the forerunner to an outcome of profitable results.

Don’t Wait

Do you believe a “double-dip” recession is on the horizon? Do you believe that competition may be fiercer to where you could see a 10% or more drop in revenue? Do you foresee inflation from your company or dealership’s expenses, one where you are unable to raise your prices to pass along that cost increase?

If you do, don’t wait! Think about and consult on the things that you will do now to combat these economic challenges, then act as if it is about to happen. Prepare for 2012 today, if you haven’t already. My guess is you’ve begun the process or are about to, and are prepared to take the needed measures to run your company leaner – and are expecting to give your company the opportunities to perform stronger, thrive heartier, if or when things get tough. You are taking control in an effort to grow your business – with less – for more. It is being done.

About the Author: Chris Polek

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