By Nicola Cook, CEO of Company Shortcuts.
It’s that time of year again, when everyone re-writes their New Year’s Resolutions, and they return to work with a renewed focus on the year ahead.
If like most ambitious business owners your focus is on growth, have you formulated a plan on how to achieve that growth in 2019? Will you increase your market share, your Average Order Value, or entice your customers to purchase more frequently? Ultimately every sales plan boils down to one or more of these three strategies. However, the experts are warning that 2019 is expected to be a tough year for growth.
Now, I’m no economist but the signs are all there. Oil prices have been steadily creeping upwards since the middle of 2016 (and were at their highest just before the last crash), inflation is rising, house prices are stalling (except in the capital), the US economy is overcooking it’s bacon, cheap Chinese imports continue to undermine many markets, the high street is in decline as we continue to change our shopping habits, the Italian banks are overinvested in Turkey (potentially threatening the financial stability of the EU) and Interserve are asking their creditors for a rescue deal – and that’s before we even discuss Brexit. (Note: at the time of writing May has just delayed the commons vote – so who knows what the outcome will be by the time you are reading this!)
My apologies if you were expecting one of my usual positive and upbeat columns to kick-off the new year, when instead I’m as cheery as the grim reaper, but the fact is, every economy always operates in cycles and we’ve been riding an economic growth curve for eight years now, so it’s prudent to expect a period of contraction within the next eighteen months.
Those of us old enough to remember the humdinger of a recession in 2008 (which really hit the North East service sector particularly hard), or even the recession before that in the early 1990s, will likely have the scars and the war stories to tell – I know I have, but what I also have is some insight into how to avoid going insane should the same happen in the next twelve months.
1. Know your numbers.
Now is the time to have clear visibility on cash and cashflow, backed up by accurate projections and forecasts. In the last recession only one metric changed in my business, but it cost me dearly. All our conversion rates and order values were the same, but our lead times doubled, and this one change put an enormous pressure on cashflow. Note: You need to be positively cashflowed, longer than the average lead time in your pipeline. If your average lead time is six or even twelve months, then you need to have sufficient cash available to trade for at least that length of time, to ride out any dips in your incoming new business.
2. Ensure you have enough oxygen to ride out any downturn
Oxygen in business = cash. Stress test your business. Raise working capital now if your cashflow demands. It’s always easier to get your hands on cash when you don’t actually need it. Run a million different ‘what if’ scenarios, and plan for each potential outcome. How fast could you open a new income stream, break into a new market if needed? (Right now I have a post-Brexit apocalypse business plan tucked away in my desk drawer. I hope I don’t need it, but I know exactly what I will do if we need to adjust our long-term game plan).
3. Sweat your assets
Look to make improvements in productivity now. How can you gain more with the same people, the same technology and the same processes? Your people need to know NOW, the core principles of selling – especially if you’ve become reliant on organic inbound leads. Most businesses have no clue how to switch from reactive order taking to proactively selling and the amount of time it takes to refine your Sales Engine.
4. Cut once, cut deep…
…like a surgeon. If the worst were to happen don’t dither. Confront the brutal truths and act swiftly. Don’t panic though. Even if your sector or market does diminish, it always cleans out the dross in your competition, (you know the cowboys who offer poor products or services at minimal) meaning that when the market grows once again, you will be better placed to expand your market share and achieve your long-term growth ambition.
To watch a video on how to improve the sales focus of your business, visit www.companyshortcuts.com
