Taking Biz From Slow to Go
Wanna change slow time into grow time? Here are some tips for using downtime to position your company for growth.
To some, it's the calm before the storm; to others, it's the wake. Either way, slower sales months offer more than just potential vacation time. Whether they occur during the summer or throughout the holiday season, downtime offers an ideal opportunity to lay the groundwork for future productivity and growth.
According to Paul Rich, a principal with the international accounting and consulting firm Rothstein Kass, the key to capitalizing on downtime is to keep your focus on the large-scale issues that effect your growth. That means instead of solely preparing for your busy season, try directing your agenda toward your goals for the next two to five years.
Your business objectives, says Rich, should be the focal point that guides your activity during less busy times. That means everything you do during your slow months should somehow lead you closer to what you want to accomplish over the next several years.
Rich offers several suggestions for using your business's breathing room to position your company to take a more proactive, growth-oriented stance:
1. Plan and audit. A plan makes it easier for you to get where you're going. But in order to know where you should go, you first need to know where you actually are. Rich suggests reviewing your internal practices and controls to discover the areas that are holding your business back. "It's called an internal managerial audit," he explains. He also suggests using what he calls "zero-based budgeting," which means taking a look at each process as if there were no program already in place. "Ask yourself, 'What should I do if I could start all over again?'" he advises.
By examining specific areas within your company, you should be able to determine which areas impeded your growth in the past year. Would you have been able to secure a loan if you'd established better banking relationships? Were your managers proactive leaders or reactive firefighters? Once you find out where the weaknesses are, remember to then think in terms of future growth and develop a concrete plan of action.
Rich also recommends developing disaster plans and ensuring your personal wellness. That means taking care of personal wills and getting physical exams are good ways to take advantage of downtime. Without a healthy leader or a contingency plan, your company's like a boat that's lost its rudder.
2. Review customer statistics. All customers are not created equal. Since that's the case, Rich recommends that in addition to knowing your customer base, you should also rank your top 10 to 15 accounts based on volume or revenue, if not both. "This is where you're making your money," he explains. "So determine what they're buying and what they have in common."
Also be sure to gather information about customers who have reduced or withdrawn their business with you altogether. "The most expensive cost on your financial statements could be the cost of not doing business with certain customers," Rich warns. Once you determine who those customers are, again think of the big picture and develop a game plan for resurrecting each account.
In the course of your review, don't forget to research the payment history of your clients. If you find accounts in past due status, downtime can be a great time to initiate collection calls.
3. Review your inventory. What's in--or isn't in--your warehouse can reveal a lot about your business. Taking inventory isn't only the best way to find out what you actually have on hand, but it will also help you figure out the effectiveness of your internal controls. Inventory patterns hold detailed information about any bookkeeping inaccuracies, theft or other internal issues.
Again, look for areas of potential improvement. Rich suggests studying your inventory to determine whether you're putting your storage space to its best use. Are you consistently backordered on top-selling items while slower moving products crowd the shelves?
One example of creating a proactive, growth-oriented approach to your inventory is to develop sales incentives for items that are overstocked. "Try to figure out who might be able to use [the overstocked item] and how to sell it, so you can turn it into real money," Rich recommends.
4. Combine work and play. There's no reason that you shouldn't benefit from your downtime by getting away from the office. Just make sure to keep your focus on business growth and opportunity. "Some [businesspeople] play golf, but they're not always as discriminating as they should be when it comes to whom they should be playing golf with," Rich contends.
So when planning your leisure activities, consider inviting your biggest clients or vendors. Your banker, accountant and lawyer are other great choices. "I'll try to create relationships with them," says Rich, "so while I'm enjoying myself, I'm also bettering my company."
Another great way to combine business and pleasure is to plan your company retreat or take that much-needed business trip during the slow months. Retreats offer an ideal time to review yearly productivity and plan for the coming year. At the same time, you can develop and solidify nonlocal business relationships by making visits to vendors and other associates.
If you find that your business doesn't experience extended periods of downtime, Rich advises to work these steps into your regular business program. "These are the steps every businessperson who's really serious about business must take," he says. "This should be part of the business of the business."
He's also quick to insist that to lead your business to its goals, you must continually focus on the bigger picture. "It's not the microstep that's important," he says. "It's the macro-outlook." If you can capitalize on your downtime as a limited commodity, your business will reap the rewards.
Jeri Yoshida is a freelance writer in Santa Monica, California.