Here are some tips that can help you with problems we commonly encounter. We know the old saw, "You get what you pay for."
Let us emphasize, therefore, that these tips are not free ... they are priceless.We will revise these from time to time, so be sure to check back for the lastest. 1. Get help.
Rent key people who are strong where you are weak. Consider hiring a seasoned executive on a temporary or part-time basis, or bring in experts for specific needs. In contrast, retrain or weed-out employees that duplicate already overabundant skills.
2. Be choosy
about taking on new clients or projects. Unless you know you have the time and resources to do a good job, refer the business to someone else. Develop strategic alliances with the companies you refer business to so that you receive some form of equivalent compensation.
3.
Get rid of your bad customers.
You don't have to deal with customers who don't pay on time or give you a headache. See if there is a win-win-win situation where you can refer your undesirable customers to someone who will appreciate them – and will show their appreciation. Otherwise, refer them to a competitor you particularly dislike.
4.
Eliminate unprofitable products or services.
Evaluate every item you sell in relation to its contribution to profits. If an item is yielding less than it's fair share of profits try to correct the situation.
- First, investigate a price increase – will your customers accept higher prices without significant loss in sales volume?
- If increasing prices is not feasible, take another hard look at how you make the product or perform the service – can you reduce the costs?
- Finally, determine if someone else can build the product or provide the service cheaper than you can – if so can you sell their goods through your business?
- If all the above is fruitless, simply raise prices and let the chips fall where they may...or discontinue the item(s).
5. Negotiate terms
with customers and vendors to maximize your profits and cash flow position. Ask vendors to provide you on a Just-In-Time basis and still offer discounts as though you were buying in lot quantities. Ask customers for speedy payment and, if possible, you might even go so far as to ask for deposits to secure their order. It is said that more profits are made at the negotiation table than on the production floor.
6. Refocus marketing
to prioritize profits over revenue. Align compensation and incentives to maximize profits. Don't waste time and money advertising and promoting items with low profit margins. 7. Implement real-time management information and control systems
– NOW. You can't afford to fly by the seat of your pants in our ever-accelerating business world. You must always know what each customer, product, vendor and employee is contributing to your profits - NOW. 8. Find mentors
and get as much advice as possible to minimize expensive mistakes. You may want a mentor for each key area of your business; marketing, finance, operations, management, etc. Professional organizations and organizations supporting specific executive positions can be priceless sources of mentors. Give back – be a mentor.
9.
Involve a financial professional
– please, please, please! With his or her help, develop a multi-faceted funding strategy to meet every contingency you can foresee. Naive, short term, funding decisions can easily paint you into a corner – eliminating other future funding alternatives. Create a day-to-day cash flow monitor – and use it.
10. Raise prices.
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