Wrong Direction
By Adam
Radzik
Marketing & Sales Coach
(Scene: Telephone conversation between Adam Radzik, marketing and sales coach, and Nigel Kendrick, reporter for British Business Today, a daily business publication.)
 Nigel: “We know that you are a widely respected guru in the marketing and sales field. What would you say is the number one flaw in business that you see today?”
Adam: “As always, it is the basics that are usually the problem. In this case, it is a problem of direction. Companies are just not headed in the right direction.”
Nigel: “What does that mean Adam?”
Adam: “In the morning when you leave your home, you have the choice of going in one of three directions. You can turn to the left or to the right, or you can walk straight ahead. If you make the wrong decision – let’s say, heading left instead of right – your whole day is likely to be chaotic. The question of the right direction is the first decision for a company and the most important one.”
Nigel: “How does that translate into business life?”
Adam: “Companies are still functioning in the way they did 10 years ago. All right, they have cut back on labor costs and they’re watching their pennies more carefully, but that’s not nearly enough. And to prove my point, their sales remain lackluster. They haven’t really changed their direction, their focus. They need to think about better targets. They need to revise their approach. They need to become innovative. They have to stop doing things the old way. It is not working!”
Nigel: “Adam, give me an example!”
Adam: “One of my favorite stories concerns a national meeting of horse-drawn coach companies that were having a big meeting in New York City in the early 1900s. They were discussing the potential threat to their sales by that new contraption – the automobile.
“‘You can’t pet it,’ said one. ‘It goes too fast,’ said another. ‘It smells bad,’ said a third. ‘It won’t replace the elegant coach, which has been the way people have traveled for 2,000 years!’ said a fourth. One company said nothing. After some thought, the president observed, ‘We are not really in the coach business, we are in the transportation business. We will adjust somehow.’ That company was Fisher Body. It was the only one that survived. All 2,000 coach companies went out of business in a short period.”
Nigel: “So the key is to adapt.”
Adam: “Exactly, and that means change. Companies are basically functioning the same way, but the road has changed. And if you don’t turn with the curve of the road, you will end up sailing over a cliff!”
Nigel: “But how do companies do that?”
Adam: “By doing two things: examining and questioning much of what they are currently doing, and hiring a creative sales consultant like me to assist them!”
Nigel: “Ha ha! You talk about the road changing direction, but how long do you think it will take before the economy will get better?”
Adam: “I have a saying: Healing and recovery are gradual and refuse to be rushed! And by the way, things will never go back completely to the way they were.”
Nigel: “You don’t sound like you’re kidding.”
Adam: “If I were you, I would bet the whole ranch on that prediction!”
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Guest Editorial
Five Ways Middle Market Companies Can Improve Profitability and Liquidity During an Economic Downturn
Written By: Robert J. Figurski, MBA
Managing Director – Financial Consulting, Bederson & Co.
All companies, regardless of size, need to focus on every aspect of their business if they are to survive in today’s economy. Now more than ever it is critical for middle-market companies to directly address areas of indecision, which is highly detrimental to their continued viability. We have identified five core areas that contribute to financial losses among middle market businesses: (1) procrastination, (2) wages and perks the company cannot afford, (3) unprofitable “big-box” customers, (4) excess slow-moving inventory, and (5) lack of focus on both projected weekly cash flows and realistic monthly profit-and-loss-statement projections for at least 18 months into the future.
- Avoid procrastination.
Management is generally aware of a company’s negative cash flow problems as well as the underlying factors causing the problems, but it is unable or unwilling to address them, in the hopes the problems will somehow disappear. This approach causes continued cash hemorrhaging and only exacerbates the company’s weak liquidity. Take immediate and positive action to correct negative cash flow.
- Eliminate overextended wages and perks.
Middle market companies often employ too many family members who are overpaid for the true economic value that they bring to the company and who receive perks and benefits the company simply cannot afford. Too many overcompensated employees, whether they are family members or unrelated, can seriously threaten a company’s continued existence.
- Get rid of unprofitable “big box” and other major customers.
In many instances, maintaining a profitable relationship with very large customers is just plain unprofitable. Price negotiation and paying on time can be constant challenges. Many big-box retailers simply take advantage of their economic strength to pay slowly, often delaying by as much as 90 days or more. And the problem gets worse if those larger, slow-paying customers file for bankruptcy. Many middle market companies have been forced to file their own bankruptcy or, worse, close their own business due to a major customer bankruptcy filing. As many of these larger customers are privately owned, it is often impossible to ascertain their true financial health. If a client is public, it is important to analyze SEC databases to review its 10Ks and 10Qs (annual and quarterly financial statements).
- Purge excess inventory.
Management often keeps very slow-moving inventory on its shelves for years; the thinking behind this is that if anyone ever wants the item, the company can sell it for a large profit. But this ill-conceived plan ties up cash and costly warehouse space. Every dollar invested in slow-moving inventory is one dollar less that is available to pay down the bank credit facility or past-due trade debt. Many companies do not have turnover analysis by location and SKU available to them, so they cannot see exactly how much inventory, by category, is actually moving unsatisfactorily.
- Prepare realistic cash flow projections.
The current downturn of the economy has had a serious impact on revenues and profitability. The record number of people unemployed in the U.S. continues to grow because so many U.S. manufacturing plants have closed. Unfortunately, our unemployed ranks may not lessen for many years; these plants will remain closed forever as more and more products are imported from the Pacific Rim countries. The U.S. is simply no longer a manufacturing economy that employs great numbers of people without higher education.
Despite the recession, many companies still do not analyze their weekly cash flows, how much they expect to collect in receivables in the next week or what bills or bank loan payments they must make. Every company should have weekly, updated 13-week cash flow projections as well as realistic monthly projected revenues and expenses for at least 18 weeks into the future.
In these turbulent and uncertain times, new thinking, awareness and action must replace uncertainty, denial and avoidance for a company to remain viable during the downturn and be positioned for a strong resurgence once economic conditions improve.
Robert J. Figurski, MBA, CFE
rfigurski@bederson.com
Cell 917-613-2500
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Without fanfare, hullabaloo or complaint, the effective person methodically goes about his/her daily labor. |
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» Print this quote
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The turmoil at the highest level of American business has impacted dramatically on the most prestigious banks, professional firms and service providers. As revenues have decreased for the largest companies, they have turned to these service providers and asked them to reduce their fees substantially. The mega-service companies have responded in a minimal fashion, because their fixed overheads are so high and, frankly, they have gotten used to obscene levels of compensation. They have become similar to ocean liners trying to turn while at sea – a slow and gradual process. This has caused a change in the buying habits of large companies. Whereas before they purchased based on the CYA (“cover your ass”) form of purchasing, now they are looking for better pricing and greater value. Smaller providers should stop saying, “We could never get this client. It’s too big for us.”
I have been a sales coach for 27 years, and I am telling you: There is gold in them thar hills! |
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It’s here! The four-CD set “Quick Advice on Improving Our Relationships” by Adam Radzik.
Chapters include:
Partner Management – 33 principles
Partner Trust – 16 principles
Partner Expectations – 15 principles
Partner Barter – 10 principles
Partner Compatibility – 15 principles
Partner Commitment – 6 principles
Partner Communication – 27 principles
Partner Character – 9 principles
Partner Equality – 14 principles
Positive Partners – 31 principles
Negative Partners – 29 principles
Partner Conflict – 29 principles
Partner Evaluation – 13 principles
How to Treat Me
The four-CD set costs $59.95, including sales tax, shipping and handling. Please make out the check to Life Improvement Press, and mail it to 23 North Wyoming Avenue, South Orange, New Jersey 07079. Please allow 2-3 weeks for delivery. |
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The Affair
A man walked into a cafe, went to the bar and ordered a beer.
“Certainly, sir, that’ll be one cent.”
“One cent?” the man exclaimed.
He glanced at the menu and asked, “How much for a nice juicy steak and a bottle of wine?”
“A nickel,” the barman replied.
“A nickel?” exclaimed the man. “Where's the guy who owns this place?”
The bartender replied, “Upstairs, with my wife.”
The man asked, “What’s he doing upstairs with your wife?”
The bartender replied, “The same thing I’m doing to his business down here.” |
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| "I enjoyed your talk last week at the Italy-America Chamber. You certainly know your stuff. But I have been selling for more than forty years… |
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