ADAPT OR FAIL

Throughout my varied 40-year business career, I’ve found that the only constant is change.

I’ve worked for one of the biggest companies in the world, and also started a business from scratch in my own dining room. I’ve worked for American, Irish and UK companies. I’m on my third recession. I’ve held directorship roles in finance, sales, marketing, and asset management – as well as being managing director of four different companies.

In all of these, many lessons were learned. For example:

•    Your team is your strength
•    Revenue looks good but margin looks better
•    Customer satisfaction is unacceptable
     – customer delight is the  only way
•    You can’t over communicate
•    Integrity is all

But the real learning, is that if businesses don’t adapt to change they will probably fail. Imagine if your only income was from selling music cassettes; imagine selling airline tickets without an Internet presence; imagine only selling leaded petrol at your filling station.

In business any number of things can change: technology, competition or legislation, to name but a few. Currently we’re living through one of the worst recessions for decades and almost no company is unscathed by it – they have all had to adapt. It’s clear that this new world will be here for months, if not years, to come, and certainly the heady times of the last few years won’t be back for a very long time.

The common worry I hear nowadays from business people in all industries – particularly those who started their business in the last, say, seven years – is that this environment is completely outside of their area of experience, and they aren’t confident they have done everything possible to deal with the challenges of today, let alone the future.

Usually they have taken out costs but that isn’t always the right decision – for a start, if that impacts negatively on customer service then the benefit may well be short lived.

The problem is that a lot of small and medium sized businesses don’t usually have the experience to carry out a corporate MOT. Even if they did, that person’s involvement with the history and day-to-day activity of the business means that they can’t possibly be impartial – which is vital to the success of any such review.

The reality is that now is the time to get external advice. It’s rather like seeing a doctor when you are unwell.

An independent consultant will be able to go through all the aspects of a business – revenue, pricing, margins, sales force effectiveness, marketing, competition, variable costs, fixed costs, funding, structure, customer service, processes, performance management and structure, then advise on where improvements can be made.

In this context, the independent has to be experienced in all facets of business. You can’t use one person to solve a sales issue, another to look at processes and another to look at performance management systems. By the same token, their experience should have been at the sharp end of business where their profit performance meant whether they kept or lost their jobs.
 
Typical proposals I have made are:

•    A company with branches around the country should retain the branch structure, but move to a ‘hub and spoke’ organisation structure
•    Bring work into the business that was previously out-sourced
•    Total overhaul of reporting to improve cash flow
•    Addition of a new product which was financially risk-free and filled a gap in the market
•    Refocus on long term products to counter cyclical nature of a rental business
•    Review of all marketing channels to establish where to focus future spend

Understandably most people don’t want to wash their dirty linen in public, but if your business is suffering in the recession, an external view from an independent, experienced and confidential person can be the difference between survival and failure or survival and growth.

Please refer to Increasing Profit.