I was listening to music by Prince last week and the song “1999” came on. A theme of the song, written in 1982, is to “party like it is 1999”. At that time, some thought the world would end in 2000, so partying heartily made sense, at least to Prince. That got me thinking about today and the economy in which we do business...so, to the tune of Prince’s 1999, I found myself singing “Manage like it’s 2009”.
I believe it is important that each of us manage our business as if it were 2009 all over again. While the recession is “officially” over, we are experiencing the weakest post-recession recovery since WWII. Unemployment remains at over nine percent. Consumer confidence is at its lowest point in 20 months. Gas prices and other commodity and key food prices are up, leaving fewer discretionary dollars for consumers to spend. Access to credit, especially for small business, is tight; putting pressure on many companies and preventing expansion. The legislative and regulatory environment continues to place financial burdens on small business. Instability in the Arab world, the debt crisis in Europe, and other world issues hold the possibility of pressuring our already fragile economy. And the US debt crisis looms large. Some economists believe we are headed in to a “double dip” recession.
This fragile economic recovery combined with all this uncertainty is the reason I believe we need to “manage like it’s 2009”. And what does “manage like it’s 2009” mean? It means we need to ensure our team is doing all the proactive activities to generate sales, and that we manage expenses and focus on improving cash flow. It means we need to ensure that we (and our team) are getting back to basics and superbly executing the basic fundamentals.
Getting Back to the Basics
The basics include everything from how the phone is answered to producing our products right the first time, on time. As managers, we need to “inspect what we expect” and understand that “what gets measured or monitored, gets done”. The reality is that we, as the heads of our organizations, are the ones where this responsibility of getting back to basics lies: it is our responsibility to ensure our team is superbly executing the basic fundamentals. And we do this by trusting, yet verifying. And this verification needs to be conducted consistently for our team to know it is important to us (and thus should be important to them).
Proactively Building Sales
Our economy is fragile and we cannot take customers or business for granted. The size of the pie is not growing. We need to be in front of our customers—as well as prospects—asking open ended questions to uncover their business challenges and points of pain so we can propose solutions to help them achieve their business objectives. We need to be top of mind when customers or prospects have a need.
While consistent marketing can help with this, it is the personal relationships built by being face-to-face with customers and prospects and keeping in touch with them that truly develops top of mind awareness. As we learned in 2009, the more consistent we are with our proactive outreach to customers and prospects, the better our results.
As we did in 2009, we need to ensure we are actively managing expenses and looking for ways to reduce expenses. We are facing inflationary pressures and we may not be able to pass all cost increases on to our customers due to competitive pressures; managing expenses in this environment is even more important.
Improving Cash Flow
We all know that cash is king! You can be profitable, but if your profit is tied up in receivables, life is very stressful. We need to proactively follow up on accounts receivable, track Days Sales Outstanding (DSO) with the goal of improving it, and take advantage of cash discounts from vendors as appropriate.