how to grow your business in a slow market

HOW TO GROW YOUR BUSINESS IN A SLOW MARKET

byMatthew Needham

www.bigredtomatocompany.co.uk

• • • T h e B i g R e d To m a t o C o m p a n y L t d • W h i t e H o u s e , C l a r e n d o n S t r e e t , N o t t i n g h a m , U K •

w w w. b i g r e d t o m a t o c o m p a n y. c o . u k

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Contents

1. Assess your position! 1

Resources! 2

2. Act! 3

Resources! 4

3. Cash is King! 4

Resources! 5

4. Focus on what matters! 6

5. Manage Your Costs! 7

Resources! 8

6. Get Reliable Management Information! 9

Resources! 10

7. Plan for different Alternatives! 1

Resources! 1

8. Talent! 2

Resources! 2

9. Manage Stakeholders! 3

Resources! 3

10. Seize Opportunities! 4

Resources! 4

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Most businesses have been hit pretty hard these last few years by the global recession, but whilst your competitors struggle with market conditions now is the time to start preparing your business for turnaround. This report has been put together to summarise 10 things to do right now to grow your business. These arenʼt quick fixes, but 10 building blocks to take your business to the next level.

In these dark days of the last couple of years itʼs easy to think that the economy will never turnaround, weʼll show you how your business can survive and how you can capitalise when it does.

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How to Grow Your Business in a Slow Market



1. Assess your positionIf one day you were out walking in the hills or on the moors and suddenly the weather turned, the first thing youʼd need to do is understand where you are and the dangers youʼre facing. You'd look for the nearest place of refuge, whether to carry on, turn back or head to an alternative location.

Itʼs just the same in business. As an owner/manager or business leader you need to know where you are before you can decide what to do next.

Here are 6 things you can do right now to assess the current position of your business:

1. Products and Services

Over the last 3 years, what products/services have been the real driving force of performance in your business portfolio?

2. Competitive

How do your products and services compare in price/quality or value to your competitors?

3. Customer Opinion

When did you last talk to your customers? Go and make appointments with your top 5 customers and bottom 5 customers. Understand why are your top 5 buying and why arenʼt your bottom 5?

Important: donʼt try to justify what youʼre doing or get defensive just ask questions and listen to what their problems are.

4. Whereʼs the value?

What makes your products or services truly unique? What value do they give the customer?

5. The marketplace

Do you know who your competitors are? Try doing a Google search of your company and product names what are people saying about you? What other companies names or products appear in the search results?

What are your competitors doing?

What are your competitors offers?

How does their offer compare to yours?

How are they promoting their products?

Do they appear to be growing or struggling?

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6. Strengths, Weaknesses, Opportunities, Threats

When you have the answers to the questions, decide whether each answer represents a strength, a weakness, an opportunity or a threat to your business. Then, group together all the strengths, the weaknesses, the opportunities and the threats and list them under each heading. [See Resources section for a free Word Template]

• Strengths: characteristics of your business that give it an advantage relative to others in your industry.

• Weaknesses: are characteristics of your business that give it a disadvantage relative to others.

• Opportunities: are external options available to you to increase sales or profits in your market.

• Threats: are external elements in the marketplace that could cause trouble for your business. (Which could include new technologies or entrants to the market)

Once youʼve got answers to the questions in your template you can then start to form a plan of what you need to do to capitalise on your strengths, take advantage of opportunities, but minimize threats and weaknesses.

Some tasks in your plan will be easy. Some will be difficult. So, split them up into tasks to do in the next 7, 14, 30 and 90 days. Tasks that you can do yourself and tasks that youʼll need help from others to complete.

Resources

Download a free SWOT Analysis template (in Word format) here:

http://bigredtomatocompany.co.uk/business-growth-tools/

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2. ActIn times of uncertainty you canʼt afford to sit back and not take advantage of opportunities which present themselves to you.

When an opportunity presents there are 3 steps (which weʼll call the 3Eʼs) to take:

1. Examine

First of all what is the opportunity that has presented itself?

2. Evaluate

How does this differ from what you have done before?

What will be the impact this will have on your business?

What will be the impact on your other products or services?

What is the Market for this product/service or enhancement?

How will your customers react?

3. Execute

Once you have evaluated the opportunity you must act decisively.

As Yogi Berra once said:

Doing nothing is not an option. You need to be actively looking for opportunities.

Opportunities present themselves in many different ways. Your job as a leader or business owner is knowing where to look, hereʼs some suggestions:

Competitors Products - what are your competitors doing better than you?

Other industries - what lessons can you learn from other industries? (eg Southwest Airlines took inspiration from Indie Car racing to reduce gate turnaround times)

Ask you customers: what do they think? What do they want?

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“when you come to a fork in the road, take it.



3. Cash is KingMost businesses fail not by failing to make a profit, but by running out of cash.

Never has this been more true than in the last couple of years when banks have not extended overdrafts or granted business loans. So never has the time been right to look within your business to see what opportunities exist to generate cash – start by looking at:

1. Who Owes You Money

Make a list of who owes you money and rank that by how long the money has been outstanding over due date. At the top of the list should be the oldest debt.

Start calling them and ask for payment.

Be cautious of accepting new work until they have paid off outstanding debts.

2. Stock

How much stock are you holding over and above the stock required to meet your in hand orders?

Will your stock last longer than the time it takes to get new supplies based on your average sales?

Do you need to hold a sale or promotion?

3. Who Do You Owe Money?

Make a list of who you owe money to and rank that by how long the money has been outstanding over the due date. At the top of the list should be the oldest debt.

Can you delay payment on any of these debts or renegotiate payment terms?

4. Look at your cost base

Are there any costs that donʼt directly add value to the business.

For example, packaging, is it required?

5. Communicate

Tell your workers or team whatʼs going on and why and ask them for their ideas.

6. Seize Opportunities

As the economy starts to turn, some businesses will run out of cash and go to the wall. Which could provide opportunities for your business. Having cash on hand will enable you to buy stock or equipment cheaply, premises, or even the entire business, which in turn will allow you grow your business.

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Resources

Download a free Cash Flow template (in Excel format) here:

www.bigredtomatocompany.co.uk/cashflow

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http://www.bigredtomatocompany.co.uk/cashflow

http://www.bigredtomatocompany.co.uk/cashflow



4. Focus on what mattersWhen things all around you are changing itʼs easy to get distracted. So focusing on what matters is easier said than done. You need to know what are the things that are important to your business:

1. Which clients have declining orders and how can you mitigate against this?

2. Which products/services do you have which really contribute towards your profitability?

3. How can you increase your product volume through your existing channels to market?

4. Which investment programmes are important to seeing you through the uncertain times and which ones can be delayed?

Focus on the core of your business. The core products and the core clients and build from that.

Are you really critically analysing every investment spend and whether those spends are really critical to your business? What will the investment do for your business - ask yourself critically what needs to be done.

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5. Manage Your CostsAlthough the economic downturn has forced many companies to reexamine their cost base, many companies approach this in a haphazard fashion. Meaning that they cut some costs too much, others not enough or cut back entirely on the wrong things. You need to ensure that when youʼre reducing costs that the new cost base is sustainable in the long-term whilst successfully maximising profitability.

Companies should focus on enhancing operational performance. So, go for targeted rather than across the board cuts, extract better value from the business, reduce unnecessary complexity and look at whether you business model needs to change.

To be in the right place for when the economy turns, the emphasis should be on:

• improving business performance and driving profits through improving efficiency and eliminating waste;

• managing your people costs.

• improving planning and execution;

• simplifying and improving your business processes

• improving the overall cost control environment and creating a low cost culture

What questions should you ask?

Cost of supply

• Is your business making and buying the right things at the right price and time?

• Are you putting skills and competitive advantages in the right place?

• Is your company eliminating waste?

• Are your business operations completely aligned to the end customer?

• Can you use smarter procurement techniques to buy more cheaply?

Value creation

• Does your management team understand where value is being created? (and destroyed)

• Does your management team know which products make money and which loose money?

• What profits are your activities generating and where are you wasting money?

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Business structures

• is your business organized to service your customers in the lowest cost way?

• How much do you spend on business support? Is this appropriate for your size of business?

• How much overhead creates value and how much is just overhead?

Controlling your people costs

• What are you doing to maximize profit and minimize waste?

• What are you doing to reduce your people related costs such as absence, holidays, pension, share schemes, car schemes and other benefits?

• Is your business undertaking routine tasks that could be done more cheaply elsewhere (e.g. outsourcing activities)

Cost culture

• Long term, how do you keep out cost creep?

• Are your business processes and practices aligned to keep your costs down?

Resources

Read more about turning costs into revenues

http://bigredtomatocompany.co.uk/posts/turning-costs-into-revenue/

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6. Get Reliable Management InformationNow, more than ever you need fast and accurate management information. You need to know whatʼs hot and whatʼs not. What costs are rising and what costs are going down.

It doesnʼt matter whether you are a 10,000 person multinational or a 1 person start up. You need to know what drives your business so that you can do something about it.

Decision making needs to be based on facts and decisions needs to be made faster. So you need to create an information dashboard:

When designing your information dashboard, you need to think about the following 10 steps:

1. Think about what areas need to be managed (see resources section for more information)

2. How will you receive this information?

3. Who will put it together?

4. Where does it come from – whatʼs the source?

5. Whatʼs your degree of confidence in the information? How accurate is it? How accurate does it need to be?

6. Are you focusing on the management of cash?

7. Who will make the decisions from this information dashboard and how often will they receive it? (Hourly, Daily, Weekly, Monthly etc)

8. Are you only looking at the past? To what extent will your systems give you a view of the future?

9. Thinking of the last big issue your business faced, could your information dashboard have predicted it and therefore mitigated it much sooner?

10. Can you see all the information clearly at a glance?

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Case study: UK based retailer, ASDA, part of the Walmart Group, has notices posted all over itʼs Leeds Head Offices, “You canʼt have EDLP without EDLC”. A constant reminder that you canʼt have every day low prices, without everyday low cost.



Resources

Read more about creating an information dashboard using actionable metrics

http://bigredtomatocompany.co.uk/posts/actionable-metrics/

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7. Plan for different AlternativesWinning businesses demonstrate flexibility and agility. Your business model is a variety of different scenarios for operational, financial and your competitors reaction that affect the impact of any changes in your business environment (both good and bad). Adapt quickly and explore your strategic options.

1. How will your business be effected by any upturn or downturn to your trading environment

2. How will your customers be impacted by any changes to the trading environment. Are they likely to buy more or less?

3. How will your existing forecasts react to any significant changes in the environment?

4. Have your forecasts been tested for any extended market recovery as well as a speedy recovery? ie. if the market upturned tomorrow, how quickly could you react?

5. How good are your management information systems and dashboards in identifying any potential issues?

6. What areas do you need to keep your eye on?

7. What are the weak points in your business model? Is your model flexible enough to react to any changes in the environment?

8. What is your long term financial position? How significant would a change either way be (increase or decrease be?)

9. Even if your products arenʼt discretionary, could your customers find an alternative option?

10. What are your competitors doing? Is there any opportunity for organic growth within the market?

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8. TalentYour people need to play a vital role in your growth strategy. Regular and clear communication with your team is key to keeping them engaged. You need to develop key talent, keep them motivated and develop appropriate incentives for them. Think about outsourcing the stuff youʼre not good at or the stuff thatʼs time consuming so that you can focus on your key activities.

One positive thing a downturn throws up is an abundance of talent, as other organisations downsize and shed staff. Make sure that you regularly meet with talent and look at ways of working with the talent, even if you canʼt immediately afford to hire them. (Maybe as contractors or freelances on individual projects)

You need to answer these questions:

1. How is the economic climate affecting your people?2. How does your team want to be rewarded?3. Are you rewarding your team in the way they want to be rewarded?4. Do you tell your top people how much you LOVE Them?5. Does your performance measurement system reflect the contribution of your team?6. Do you regularly communicate with your team?

Are you doing all these things?

If not, why not?

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9. Manage StakeholdersAll businesses of all shapes and sizes have stakeholders. These stakeholders can range from investors to employees to the community in which you operate. In times of uncertainty there is a temptation to communicate less with the stakeholders than you should, but as there is no doubt that perception is reality, in times of change, you need to ensure that you control that perception by maintaing a regular and open dialogue with the key stakeholders. Doing this on a timely basis is vitally important.

Ask yourself these questions:

1. Do you know who your key stakeholders are?2. Do you know what their agendas are?3. How do you know youʼre meeting their expectations?4. When did you last meet or call them?5. Are you keeping up to date with changes affecting your stakeholders?6. Do you have a communication plan with your stakeholders?7. Is there likely to be any conflict between the plans of the business and the plans of

your stakeholders?

Now work through these questions and make sure you start communicating with your stakeholders.

Resources

Read more about cost effective PR:

http://bigredtomatocompany.co.uk/posts/7-low-cost-tips-to-do-your-own-pr/

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10. Seize OpportunitiesAs the economy starts to strengthen, opportunities will present themselves suddenly and without warning. You need to find ways to evaluate these opportunities and assess the impact to your business both now and in the long term.

Ask yourself these questions:

1. Which parts of the business generate the highest return on investment? Which generate the lowest?

2. Would these areas benefit from increased (or reduced) investment?3. Do you have a clear view as to the impact that your product pipeline will have on

your business?4. Is there an opportunity to reengineer your business to make you more competitive?5. How do you compare with your competitors?6. Do you understand what businesses or assets you need? (So that if distressed sales

came your way you could take advantage of them and buy them)

How would does your business shape up? Are you ready to seize opportunities if they present themselves?

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About The Big Red Tomato Company Ltd

The Big Red Tomato Company shows businesses, large and small, how to reduce costs, improve business processes and transform humdrum service departments into rockstar service providers, unlocking value and taking your business to the next level.

To find out more or book a consultation please visit us at:

www.bigredtomatocompany.co.uk/services

About Matthew Needham

Matthew Needham works with business of all shapes and sizes to deliver reduced costs and business transformation. He is a Fellow of the Chartered Institute of Management Accountants, consultant, executive interim manager and business coach.

He lives in Nottingham, United Kingdom, with his wife, young son and two neurotic siamese cats.

For more information see the following site:

http://bigredtomatocompany.co.uk/about/

Thanks for reading. Please do email it, post it on a blog, give it away or tweet about it to whoever you believe could benefit from it.

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Disclaimer and Copyright

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