The New Economy: How is it Treating Your Business?

How is the New Economy treating your business?

If you own or run a business today you know we’re experiencing an economy that is different than anyone has seen in the past. It is five years since we went through the worst economic crisis since the Great Depression.

The Great Recession brought us the New Economy

Now called the Great Recession, we saw:
• The loss of 8.7 million jobs
• More than half of adults lost a job, took a pay cut or had hours reduced
• Trillions of dollars of wealth was lost where almost everyone was touched
• Home values dropped dramatically nationwide, at one point 11 million homeowners were upside down on their mortgage and tens of thousands lost their homes
• The United States weren’t the only country impacted by the economic crisis. Financial uncertainty was repentant in Europe as nine countries saw their standard and Poor’s credit rating downgrade in 2012

We’re still in”Recovery”
In spite of numerous efforts by the government to help the battered economy get back on its feet, the “recovery” is still a work in progress. While some business sectors and regions of the country have found their footing, others are still digging themselves out of a hole.
Here is a glimpse of economic indicators that give both hope and provide continued warning signs:
• We’ve regained the 8.7 million jobs that were lost but many were replaced with jobs that pay less sometime much less. Manufacturing and construction jobs that pay around $25 an hour have been “replaced” with retail and restaurant jobs where pay is $12-16.96.
• Unemployment has dropped from nearly 10% to 6.4% in May 2014. Unfortunately the plight of the long term unemployed continues to worsen. 3.4 million Americans have been out of work for more than 6 months. This is two and a half times what is was pre-recession. Many who have found work did so with part time jobs or short term jobs. While many others have simply left the labor market and stopped seeking employment.
• College graduates are feeling the strain of the economy as unemployment among recent college graduates is still above the national average at 7.6%.
• Compounding the challenges recent graduates face looking for work is their mounting student loan debt. In the last ten years this number has grown from $260 billion to 1.1 trillion. The average student graduates with about $30,000 in debt. Many predict this to be the next “bubble” to send shock wave to our economy.
• Although the housing market is improving most metro areas find their home prices 65-80% of their peak value. The $2 trillion equity value lost may never be recovered.
• Household net worth increased to a record high of $81.7 trillion. That’s the good news. The bad news is only the very wealthy benefited. The rich got richer and everyone else got poorer.
• “Small business optimism continues its winter hibernation with the latest Index dropping 2.7 points to 91.4, a reading that historically has been associated with recessions and periods of sub-par growth. The one highlight in the January (2014) survey, a surge in hiring plans, was crushed in February by the continued onslaught of a wintry recovery now in its 5th year.” – Bill Dunkelberg, NFIB Chief Economist
• The US is still the global economic leader and is moving along better than much of the world especially debt-ridden Europe and ever- stagnant Japan. However, our growth is only moving at a 2-3% pace.
• Picking up the United States lack of growth has been China. They’ve been growing at a 9.5-10% rate over the past few years. This number is trending downward this year as economists forecast growth at 7.5%. As China’s role in the global economy continues to grow (They are now the world’s biggest trader of goods), every economic bump they experience will be felt everywhere.

Silver linings in the New Economy
In spite of these challenges many industries and companies large and small are experiencing record growth and profit. For example:
• After stumbling badly in 2011, Netflix found success as a non-network by offering original television programming. Their subscribers exceeded 40 million and quarterly earning quadrupled.
• Entertainer Beyoncé turned traditional album marketing on its ear by releasing an iTunes exclusive album in the dead of night with no promotion. Its success was unprecedented. In a social media world, free publicity is the best kind of publicity, and the combination of surprise and artificial scarcity was a great way to get people to actually open their wallets for content.
• AMP Americas is a Chicago-based company that makes compressed natural gas. While the alternative fuel market already has plenty of innovative business models,” this one truly stands out: Its fuel is converted from cow manure.
• Lexington, N.C.-based Lolly Wolly Doodle, earns more than $10 million in annual revenue. Two factors lie at the heart of their success: an innovative manufacturing approach known as “just-in-time” manufacturing and a commitment to social commerce. Lolly Wolly Doodle currently does 60 percent of its sales through Facebook and the remainder through its website.
Why are companies like RadioShack, Pennies, RIM and many others seem to be moving from one crisis to another while others find the opportunity that leads them down the path of success?

Let me know about your experience with the New Economy.

Are You Ready for VUCA?

TooManyChoicesVUCA best describes the business environment that has become the new global economy. The recession has given way to a slow and struggling recovery in the U.S. while Europe is facing a depression and economies around the globe are finding themselves in uncertain terrain.

V.U.C.A. (pronounced voo – ka) is an acronym developed by the military to describe an environment that is dominated by:

  • Volatility – The nature, speed, volume, magnitude and dynamics of change;
  • Uncertainty – The lack of predictability of issues and events;
  • Complexity – The confounding of issues and the chaos that surround any organization; and
  • Ambiguity – The haziness of reality and the mixed meanings of conditions. CEOs are struggling with how best to lead

Because they were designed for more predictable times, business models and business planning processes fail to perform well in this chaotic environment. This is because in a VUCA environment change happens more frequently, more unpredictably and with enough size to makes them “disruptive.” So the question for business leaders becomes, “how do you effectively grow sales, profits and customer loyalty in an unpredictable environment where literally everything changes in months rather than years?” Since you can’t avoid VUCA you must understand it and develop skills that will help your company adapt to the chaos it produces.

In a VUCA economy change is a constant. As markets and customers become less predictable businesses must vigilantly watch the landscape. Trends start quickly and can develop overnight bringing with it either great threats or tremendous opportunities. This often leads to shorter life cycles of products and services. With shorter life cycles market leadership is short-lived , as is the opportunity to mine the profit potential of the leadership position. Being the market leader in the past, meant years of market domination (think about IBM, Kodak, Nokia, Sears and Polaroid). In the New Economy market leadership is often measured in months.  The key to success is how quickly and effectively you can recognize and respond to market trends.

Leaders must dramatically modify or stop doing the following things to prepare for a VUCA environment.

  • Stop seeking permanent solutions to existing problems
  • Stop relying on the past and trends as an accurate predictor of the future
  • Stop assuming that long-term market leadership is possible without major innovations
  • Stop assuming that the strategies and people who got you here will get you to the next level
  • Stop assuming that the corporate culture and corporate values will remain the same

What are you doing to prepare your company to function in a VUCA marketplace?

Cash Flow Management for Business Growth

Cash flow management will make or break your company especially in a tough economy. In fact, of the 150+ major businesses that failed in 2008 and 2009 most were due to bankruptcy. (Wikipedia) Also the biggest reason small businessecash flow managements fail is usually lack of capital and poor cash flow management.

Poor cash flow management is like going on vacation without cash or credit cards. Neither turns out to be a pleasant experience. This may sound like common sense but common sense isn’t always common practice. There are many reasons why companies fail to manage their cash flow effectively including having insufficient accounting systems in place, lack of focus and lack of discipline.

Some companies struggle because their eyes are bigger than their wallets. For example, a $5 million tech firm had enjoyed steady double-digit sales and profit growth selling non-core technology to small businesses.  In late 2011 the company jumped at the chance to bid on a large project for a mid-sized business for their core technology. They were ecstatic when they were awarded the business and high fives were given all around. However the euphoria quickly turned to angst when the CEO realized the project would consume most of their resources and cash flow for the next 6-9 months. Although the project would eventually be profitable the company had to take extreme measures to survive the implementation, including laying off personnel and putting a halt on new business development. Because they failed to anticipate the impact the project would have on their cash flow management the long-term viability of the company is still in doubt.

Spending and committing resources as if the road always be straight and narrow is inviting disaster. Cash must be managed as the precious resource that it is instead of the endless supply people thought existed before the start of the Great Recession. At that time, much growth was fueled by the desire to grow and the availability of money. In the New Economy credit and cash have tightened up and demand has fallen off in many markets. This means unless you have money to burn don’t pursue a market that doesn’t have demand or you can’t uniquely and effectively service. At least not right now.

One example of a large company who positioned themselves for growth with cash flow management was ITW. They put several initiatives in place that helped them recover rapidly from the downturn they experienced in 2009. Among the actions taken, ITW:

  • Restructured several businesses to get their cost structures in line with the marketplace.
  • Assessed their various global markets and put resources where they saw growth and put growth plans on hold where markets were stagnant.
  • Improved working capital by managing receivables and inventory.
  • Implemented programs to increase cash flow.

Managing your cash flow doesn’t mean don’t spend and don’t grow. It means having the financial resources available when growth opportunities are available.

Do you have the financial resources to support your growth initiatives without putting the company at risk? If not get your financial house in order immediately. If you wait until the “time is right” it may be too late.

 

Metrics: Are Yours Helping You Grow Your Business?

MetricsDo your business metrics keep your business focused and moving toward your vision? As a small business owner or CEO of a small business you are paid to describe the future (your business plan) and then create it. This requires vision and execution. The path to any vision is rarely as smooth in execution as it is on the drawing board. Like most flights on an airplane getting off course is expected. The key is how quickly you and the pilot can course correct.

To make mid-course corrections you need an instrument panel or dashboard.  The business dashboard as a metaphor for critical metrics to measure business performance originated years ago at General Electric.  Just as you use the speedometer, oil gauge, fuel gauge, and other instruments to monitor the status of your car as you drive, you want to keep track of key indicators of the performance of your company. Like the dashboard gauges, your metrics allow you to continually assess your progress and detect any potential problems.

An effective dashboard provides you with the information you need to make good decisions that keep your company out of harm’s way and moving in the right directions. This means that you must select reliable and predictive metrics. Armed with the information they provide, you must be able to use them to help decision making. This isn’t always easy. Consider the fact that Federal Reserve Chairman Ben Bernanke and other top central bank officials failed to see the housing crash coming as late as December 2006.

With all the resources at their disposal coupled with the years of experience identifying economic trends, how did they miss the biggest financial crisis since the Great Depression? Were they looking at the right metrics? Or did they interpret them wrong? Or did they just make poor decisions based on what they saw? We may never know. But their failure to execute on this key leadership lesson points out how important it is to have metrics that inform you well enough in advance to take corrective action. 

Your choice of business metrics and the importance you give them show what you value. If you value customer service or new product development, for example, you make them central to your business metrics. You include it in your dashboard.

By instituting key business metrics across functions and groups and at every level, you directly link individual performance to measurable outcomes. This sends a clear message that not only do you care about customers and revenue, but so should everyone else, since they are accountable for the results measured by their particular metrics. Clear accountability is essential for executing this leadership lesson.

Whether you manage a small administrative staff or a  global company, you need business metrics to keep your business on track. Having a solid business plan is essential but that’s not enough because of the dynamic nature of the marketplace. This is especially true for small- and medium-sized businesses. Juvo Products manufactures assistive living products for seniors and people with mild disabilities. Because they are a growing early-stage business they must remain extremely nimble. As Park Owens, President of Juvo Products explains, It’s a matter of how quickly you adjust and how flexible you are. How quickly you can react.  I would say 50% of our business plan was right on and 50% was off.”

When establishing metrics, beware of metrics that:

  • aren’t easy to collect data that’s accurate or complete
  • are complex and difficult to explain to others
  • complicate operations and create excessive overhead
  • cause employees to act not in the best interests of the business, just to “make their numbers”

John Menzer, CEO of Michael’s describes how he and his management team use metrics to manage their business. “We talk about what we saw in our stores and we ask,” What are the three things we need to adjust for the weekend to maximize sales and earnings for the weekend?” And we make those changes on Friday. What do we see in competition? How are the promotions doing? Do we need to make any adjustments because of that? So we’re running the business on a kind of weekly basis, but our Merchandising Team is probably running on a daily basis. Even marketing is maybe running on a daily basis now because the economy is just so tough. We are changing on the fly even based on weather. We’re now using weather service and we’ve incorporated that weather service into our modeling and pricing and promotions. So if we know a snow storm is coming, we’re going to get that promotion in earlier rather than later.”

If you are committed to accelerating your company’s speed to vision you need to ask yourself the following questions:

  • Do your metrics allow you to proactively respond to challenges and opportunities?
  • Do you have systems in place that make it easy to regularly monitor your metrics and course correct to achieve your goals?

Your honest responses should go a long way for you putting in place the metrics and systems you need to navigate in today’s tough economy.

Grow Your Business with Customer Knowledge

If you want to grow your business start by taking a close look at your customers. Not only are they the key to your growth what you don’t know about your customers is putting your business at risk. Why? Because market trends and customer needs are changing more rapidly than ever before. If you don’t know who your ideal customers are, as well as how, when and why they are motivated to buy, you can’t position your solution to uniquely satisfy their needs. 

When your customers’ needs shift how quickly can you re-align your company to serve those needs? If you don’t take care of your customer someone else will.  Just a few years ago BlackBerry was the Smartphone industry leader with 43% market share. Today they trail both Android and Apple with a market share of  less than 10% and dropping.

Borders failed to recognize the importance of selling books on line and paid the steep price of going out of business leaving 11,000 employees without jobs.

Knowing who your customer is and being close to them isn’t enough in the New Economy. Companies like ITW have emerged successfully from the Great Recession because of their understanding of their customers. As Bob Hamilton, Group President for ITW explained,” The most important thing for us regardless of what market we’re in is we need to know our customer better then he knows himself. And we need to not only be close to that customer we need to be able to predict what he’s going to do.”

To survive many businesses have resorted to discounting, coupons and promotions to attract customers. What they found the customers left as soon as the promotion ended or the coupons expired. They didn’t gain customers they merely leased them. This is not a long-term sustainable strategy. Because you can’t grow your business with leased customers.

Sometimes the best way to grow profitably is to know who you are and who you’re not. Irwin Steinberg has steadily grown his CPA firm Steinberg Advisors by focusing on what his ideal clients want and need — business advice. Steinberg explains his firm’s business model,” …a lot of CPA firms have a lot of product lines. We don’t have the same product lines that they do. We have business consulting, valuation, accounting and tax. We’re not in the IT business. We’re not in investment banking. We don’t manage money for our clients.” Instead of dissipating his firm’s resources by offering services his ideal customers don’t value and don’t want, Steinberg focuses on what they do value and his firm can deliver. What are you relying to grow your business?

If you want a road map to grow your business  identify your ideal customers, make sure you know them well enough to predict their behavior and then give them what they want better than anyone else.

 

 

 

 

Dare to be Great in the New Global Economy

Dare to be great! That’s my challenge to every business owner, CEO and business leader. Why? Because if you aren’t a GREAT company,Dare to be Great you may quickly become a casualty of the new global economy.

In his book, “Good to Great,” Jim Collins said “Good is the enemy of great.” In the new global economy good enough just won’t cut it anymore. There are countless former market leaders who settled for good and are paying the price of lost revenues, profits and customer loyalty. Companies like RIM (Blackberry), Sony, Sears, Bally Fitness, and Hostess are just a few examples.

If you decide to take my challenge and dare to be great let me warn you it won’t be easy. If it was easy every company would do it. When you consider the alternative of not becoming a great company I think you’ll get the motivation necessary to jump on board.

Over the past few years I’ve been researching successful business leaders who are making great strides in this demanding economy.  I’ll be sharing their stories in my upcoming book, “Leadership in the New Economy”. Today I’ll share twelve key lessons learned that will help you in your quest to dare to be great.

12 Dare to be Great Lessons

  1. Have a vision that inspires. If you don’t have a vision that helps people rise above pettiness, egos and personal agendas your company will be doomed to major in the minors.
  2. Tend to your culture. Whether you have three employees or 30,000 culture happens by design or default. The choice is yours.
  3. All customers are not alike. Focus your time, energies and resources on attracting, acquiring and retaining customers who will help you reach your vision.
  4. In the battle for market supremacy the product with the best marketing wins not necessarily the best product.
  5.  The three biggest factors in determining your success are your business category (Standard Industry Classification), your Business Model and luck. Don’t confuse the three.
  6. When it comes to human capital be sure to win with your winners and don’t lose with your losers. Make sure that you hire, develop and retain people with your vision clearly in mind so that they: Get it, want it and have the capacity to do it.
  7. Stop looking in the rear view mirror. Accept the fact that what got you here won’t get you where you want to go.
  8. Leadership matters. Great leadership can’t fix a broken business model but poor leadership can kill a great business model.
  9. Customer loyalty is a contact sport and every contact counts.
  10. Before you change your company, look in the mirror and ask yourself, “Am I ready for this?” Change must be led not managed. If you’re not up for the challenge don’t put yourself and your people through the aggravation. Just because you can do something doesn’t mean you will. Recognize what you’re great at and do more of that. Everything else must be done by others. This means delegating it, developing the capability internally, acquiring it or outsourcing it. To change the company you must “be the change.”
  11. Embrace innovation and agility.  As you move into uncharted waters the number of “known unknowns” will be replaced by the” unknown unknowns”. Your speed to vision will be measured by how quickly and effectively your organization can self-correct their course. Failures will happen. That is guaranteed. Learning, adapting and speed of recovery are optional. Fail, learn, adapt or simply fail.
  12. Monitor the signals in the noise. Every great leader must become like hockey great Wayne Gretzky and “skate to where the puck will be.” The new global economy is producing lots of noise in every market. Determining which faint signal will result in a full bloom market trend is both art and science. If you’re not diligently monitoring and discerning signals you’re flying blind.

Before you accept my challenge to dare to be great take a moment now to imagine what your business will be like if you do. Create a clear and compelling picture in your mind’s eye of your business when it is great. Specifically how will it be great for your customers, employees, the marketplace and you?

If that image inspires you to dare to be great then take the next steps to make it happen. Assess where you are now. Determine what you need to achieve your vision. Develop a plan. Implement.

If you want a quick strategic snapshot of where your company is now take the Growth Positioning Survey (GPS). It’s a short online survey that pinpoints how your company is performing in twelve key growth factors. The insights gained from the GPS will give you the focus and confidence to accept my challenge to dare to be great. To get your free access now go to:   http://philfarisassociates.com/gps/ click the “Free Instant Access” button to get your copy now of “Growth Positioning Survey!”

 

New Global Economy Sends More Mixed Signals

The New Global Economy continues to chart its uncertain course. Business leaders looking for clear direction are still finding it difficult to read the signals in the noise. Here are just a few signals that may or may not be signals for an enduring trend.

  • New home sales reached a 2 year high. The Commerce Department stated that single family homes surged 7.6% in May which is the highest increase since April 2010. This coupled with the increasing building permits and the forth straight month of increases in the median price of previously owned homes gives support that the housing market is in a recovery mode. Will it last and will it be strong enough to ignite the economy long term? Stay tuned.
  • Shrinking emergency funds. 49% of Americans don’t have enough funds to cover three months of expenses according to Bankrate.com. Although this figure is up from last year’s 46% and moving in the wrong direction it is better than the 61% posted in 2006. On a similar note only 25% of the people polled said they had enough savings to last six months. If the economy continues to stagnate more families will deplete their savings and these figures will continue to increase.
  • New car prices decrease. The cost of a new car dropped about $500 from a year ago according to Kelly Blue Book. The biggest reason for the decline is the inventory shortage caused by the earthquake in Japan has been resolved.  This is a good example of how we are at the mercy of the New Global Economy because black swan in Japan (an earthquake) had such far reaching impact on new car prices both last year and now.
  • More trouble for the European Union. Cyprus became the fifth Eurozone country to seek a bail out on 6/25 when they asked for a$2.2 billion. Although the European Union has voted to support it’s members this situation is far from resolved.
  • Student loan debt becoming the next debt bomb. Student loan debt has reached a new high of $870 billion and now exceeds credit card and auto loan debt. More importantly the Federal Reserve Bank of New York expects the balance to continue to rise. Lisa Madigan, Illinois Attorney General said in a Chicago Tribune article, “Just as the housing crisis has trapped millions of borrowers in mortgages that are underwater, student debt could vary well prevent millions of Americans from fully participating in the economy or achieving financial security.” For many this is the elephant in the room that nobody wants to tackle because of the enormity of the problem.
  • Edward Jones see growth and opportunity with the middle class. Edward Jones who provides financial services to middle class Americans announced its plans to add 8,000 brokers and double its client assets over the next 8 years. Their goal is by 2020 to have 20,000 agents and $1 trillion in client assets. Many are skeptical because of the time and cost in training agents and in the diminishing assets of middle class Americans. Maybe Edward Jones sees a more promising signal in the noise created by the New Global Economy.
  • JP Morgan loses $4-6 Billion in the second quarter. The bank has been taking a financial beating while its been getting out of most of its disastrous credit bets. Besides questioning the size of the loss many are scratching their heads as to how such a large loss could happen in today’s “fiscally responsible” banking climate. Didn’t anyone at JP Morgan pay attention to our last financial crisis?

These are just a few signals in the New Global Economy. Do they represent trends that will lead to opportunity or greater danger?  Probably both depending what business you’re in.

The lesson from this post is for you to know which trends in the New Global Economy will give you greater clarity around your business. If you can “pull a Gretzky” and skate to where the puck will be you’ll gain a competitive advantage.  Guess wrong and you’ll become a casualty. The dots are there for all to see. Its all a matter of which dots you look at and how you connect them. Let me know which trends you’re tracking and how they’re impacting your business.

The New Global Economy Update

Now is a good time to take a quick look at the new global economy. The first quarter is behind us and trends are beginning to take shape. This update on the new global economy is designed to give business leaders a heads up on factors that can have a direct and indirect impact on their business. If you are looking to grow your business or avoid becoming a business casualty this is for you.

During my research for my book “Leadership in the New Economy” many business leaders felt that they would be immune to factors playing out in the new global economy. To them these factors were benign threats on the distant horizon of their business reality. Although they didn’t experience a direct hit due to global trends they found themselves in their wake which produce unexpected setbacks.

Please use these examples as a yellow flag for your business. Consider their potential impact and adjust your plans accordingly.

  • Our Export business is softening. After two years of impressive growth the Administration’s goal of doubling exports from $1.58 billion to $3.15 billion in five years is in serious jeopardy. With China and India decelerating their economies from the double digit growth of the past economists are predicating sluggish growth for the next couple of years. We can’t sell our goods to a market that is growing at a significantly slower pace. Who in your value chain or customer base can be impacted by a significant slow down in our export business?
  •  Business investment is declining. According to USA Today, “Investment climbed just 1.4% a forth of its late 2011 pace, which helped limit the economy’s growth to 2.2%.” This rate is below most experts forecast for 2012. How will reduced investment by businesses impact you and the local marketplaces in which you operate?
  • Unemployment in Europe reaches record high with 17.4 million workers unemployed. At 10.9% this is the highest rate since the Euro was installed. Compounding the impact of high unemployment is the fact that the austerity programs in place to reduce the counties’ debt have had poor results in lifting the economy. The rising borrowing costs, political infighting and social unrest promise to keep the European economy unsettled for the foreseeable future. How could prolonged unrest in Europe impact your investments, business and local economies?
  • Job gains in the US hit 7 month low. According to payroll giant ADP’s April jobs report the US added just 119,000 jobs. This is the second month in a row that the results were disappointing. Although many experts predict an upswing in May they remain cautious in their predictions for the year. Is this just a blip or the beginning of a stall? How will your business fare if the jobs growth stays soft?
  • Best Buy is down sizing. Like many big box retail stores the electronics chain had a poor forth quarter and an loss for the year. In an attempt to right the ship Best Buy recently reported that they will be trimming costs by cutting 400 job, closing 50 stores and downsizing many others. This is an example of a big company trying to “Right Size” their business to compete in the realities of the new global economy. By matching their business operations to the market demand Best Buy hopes to pull itself out of the red ink and into the black. Is your business in need of “right sizing”? It’s always easier to do it early instead of waiting until it may be too late.
  • Black Berry changes leadership team and launches new market strategy to stop the bleeding. After seeing its stock shrink 90% since 2008, its market share retreat from 14% to 8.2% and feeling the heat of five straight quarter of sales short falls the smart phone company is shaking things up. By installing a new leadership team led by Thorten Heim and unveiling a new market strategy RIM hopes to stop the slide into smart phone oblivion.Experts aren’t sold on their new strategy and CEO Heim  admitted that he was wrong in his January assessment the company didn’t need to make “drastic changes”. what kind of drastic changes lie ahead? You’ll have to stay tuned. Many experts feel their best chance of survival is to put the”for sale” sign up.  When a market leader starts losing touch with its customers and fails to deliver solutions that the market demands the fall from grace can be rapid and often fatal. How well does your company deliver solutions to your customer base? If your market position is weakening are you poised to respond effectively?

The lessons you can learn from these examples about the new global economy is that there are many factors in play that can be disruptive to your business even if they seem in like they’re in the distance. Successful leaders identify the indicators that can impact their business and carefully keep their eyes on the horizon looking for trends that may be the tip of  the economic ice berg. They know that “shift happens”, often unexpectedly so they remain poised to respond.

Although the example given represent potential dangers the new global economy also represent tremendous opportunities. Joseph Grobler COO of  Reveal a company says,This is the absolute best time to be in business because the growth opportunities are unbelievable”

Other companies who have successfully positioned themselves for growth include :

The CEOs of these companies have business plans in place that ensure that they are responsive to their customers and are alert to the market dynamics that can surface in the new global economy. If you’d like to discover how well your business is positioned to grow take the Growth Positioning Survey by clicking here.  I’ll also send you a copy of the Special Report:Welcome to the New Economy: Discover the 12 Biggest CEO Mistakes and How to Avoid Them.

Business Growth Strategies That Can Ruin Your Company

Business owners, CEOs and presidents are always looking for business growth strategies. The key to success is to grow,grow grow! In the old economy mistakes made while growing were more forgiving so even poor business growth strategiebusiness growth strategiess often were  rewarded. However, things are different in the New Economy. A poorly designed or poorly executed growth strategy can be terribly costly.

One of the biggest mistakes with business growth strategies is growing beyond your company’s means because it’s like going on vacation without cash or credit cards. Neither will turn out to be a pleasant experience. This may sound like common sense but common sense isn’t always common practice. One of the top reasons for small business failure is lack of capital. And if following this principal was universally applied in larger businesses, why did we have to bail out the auto industry and the banking industry? In fact, of the 150+ major businesses that failed in 2008 and 2009 most were due to bankruptcy. (Wikipedia)

Some companies struggle because their eyes are bigger than their wallets. For example, a $5 million tech firm had enjoyed steady double-digit sales and profit growth selling non-core technology to small businesses.  In late 2011 the company jumped at the chance to bid on a large project for a mid-sized business for their core technology. They were ecstatic when they were awarded the business and high fives were given all around. However the euphoria quickly turned to angst when the CEO realized the project would consume most of their resources and cash flow for the next 6-9 months. Although the project would eventually be profitable the company had to take extreme measures to survive the implementation, including laying off personnel and putting a halt on new business development. The long-term viability of the company is still in doubt.

Spending and committing resources as if the road will always be straight and narrow is inviting disaster. Cash must be managed as the precious resource that it is instead of the endless supply people thought existed before the start of the Great Recession. At that time, much growth was fueled by the desire to grow and the availability of money. In the New Economy credit and cash have tightened up and demand has fallen off in many markets. This means unless you have money to burn don’t pursue business growth strategies in a market that doesn’t have demand or you can’t uniquely and effectively service. At least not right now.

Bob Hamilton Group President for ITW put several initiatives in place that helped his organization recover rapidly from the downturn they experienced in 2009. Among the actions taken, ITW:

  • Restructured several businesses to get their cost structures in line with the marketplace.
  • Assessed their various global markets and put resources where they saw growth and put growth plans on hold where markets were stagnant.
  • Improved working capital by managing receivables and inventory.
  • Implemented programs to increase cash flow.

These actions helped ITW implement business growth strategies in targeted markets and realize a 15% growth rate.

Do you have the financial resources to support your growth initiatives without putting the company at risk? Find out how your company’s growth strategies stack up by taking the Growth Positioning Survey FREE.

 

 

 

 

 

How to Retain Customers on a Regular Basis

how to retain customers How to retain customers on a regular basis is an important step for increasing sales, profits and customer loyalty. Here are three reasons why.

  • Most (68%) customers stop doing business with a company because of indifference.
  • Existing customers are more profitable long-term than new customers.
  • It costs 5-6 times more to gain new customer than it does to keep an existing customer satisfied.

That’s why one of the cardinal sins of selling in the New Economy is taking your customers for granted. Failing to communicate or stay in regular contact leaves the door open for prob­lems to arise and temptations (the competition)to enter the picture. If the lines of communication aren’t open, the cus­tom­er may not remember you or won’t think to notify you if a problem occurs or a reorder is desired.

As a salesperson and as a company it’s important to have programs in place on how to retain customers that is effective and efficient. This will maximize selling efforts and deliver the best bottom line results.

In the New economy it’s not enough to just stay in touch. Staying in touch is important but it’s only half the battle. Once contact is made, you must use the opportunity to the maximum advantage. This means that when you make customer  retention calls they must be:

Unique. Each call should have its own unique reason for existence (follow-up on a new product, information on company inno­vations or changes and new incen­tives).  Provide the customer with new information, ask additional questions, tackle varied topics.  Your customer does not want to rehash old information or waste time.

Memorable. Make each call count by making a lasting impression on the custom­er.  Customer retention calls are a personal­ly deliv­ered commercial for your product or service.  Offer your customers “food for thought”, make them laugh or give them something to remember the call. If you don’t do something to stand out in the “sea of sameness” your message will forgotten soon after you leave the call.

Personalize. Since most sales are emotional decisions supported by logic you must use theses call to connect with your customers on an emotional level. Helping your customers emotionally identify with you. your product and your company is an essential step in building customer loyalty.

Many salespeople view customer retention calls as perfunctory at best and occasionally a waste of time. Miscalculating the importance these calls usually leads to the deterioration of a relationship and ultimately lost sales.

How to retain customers on a regular basis must become a priority if you want to protect your most important asset, your customers. Remember the saying, “If you don’t take care of your customers someone else will!” Put a customer retention plan in place today.

To learn how your customer retention plans stacks up take the Growth Positioning Survey now.