There is a lot in the news recently about all the incentives and programs designed to benefit small business owners. So, like Ed Koch, the famous mayor of New York who always wanted to know “how am I doing”… we thought we would take an informal poll to see what was really going on.
Our goal is real simple…get serious, honest, unbiased input from those who are in the “hot seat”. We wanted the comments to be meaningful so we contacted people in different businesses and different markets. By the way, we aren’t concerned about political correctness and putting lipstick on anything. We just want to know “how are you doing?”
The question we asked was: What is the biggest challenge you and / or your clients have been dealing with this past year? What have you done to solve it?
We were going to do a list of the Top-10 items but really the responses really came down to four items.
Problem 1: Cash flow is very tight.
Problem 2: Making New Sales is Difficult
Problem 3: Planning and Strategy is very tricky right now.
The solutions we are hearing can be summarized as, manage cash, prospect and sell like big dogs, cautiously keep your eyes out for opportunity.
Details and representative comments follow.
Problem and Solution 1: Cash flow is very tight. There is no easy answer. The solution has been to carefully manage cash flow by focusing on payables, receivables, and reducing all non-essential expenses and costs.
Representative Comments:
Larry Ely, Professional Graphics Printing Co, Sales Manager
“…the biggest challenge will be controlling labor costs, managing cash flow and growing the business back to previous sales volume in a down market. The solutions are managing overtime costs, hawking our accounts receivable and working on creative marketing”
Michael Fisher, SITE Resources, Principal
“…our accounts receivable is a problem we haven’t solved but we’re doing a better job with timely billing and follow up…competition is causing us to lower fees and in some cases we just decide not to chase certain clients for work. We WILL NOT play the low-ball game and then go back to clients for extra billing. In some cases we have had to limit the scope of work we can do for a given fee. Lack of funding has always been a problem but much more so today. Clients just don’t have the available funds to pay for their “wish list”. More often, we are providing supplemental services in the middle of a job just to get the job done even though we don’t get paid for them”
Shiela Cox, Performance Horizons
“...The biggest challenge I’ve seen is maintaining profits in the face of declining revenues due to reduced demand for products/services coupled with downward price pressure.”
The best solution I’ve seen is:
**careful analysis of profitability by product, service, channel, and customer
**limiting or eliminating low profitable activities
**expanding or creating high profitable activities
Problem 2: Making new sales is difficult. Solutions include increasing marketing (although not always to success), providing extra services, and looking carefully at product mix and value of offerings.
Representative Comments:
Kay Rosburg, Dever Designs, VP
“…the biggest challenge has been the loss of clients and projects that were put on hold and replacing the work. No question, revenue stability is our challenge. Our solution…have not come up with one yet! Have spent WAAAY more on marketing in 2009 but didn’t get the results I hoped for. The reduced revenue has forced us to delay the capital expenditures and our salaries have been substantially reduced…across the board”
Dean D’Camera, D’Camera Group, Principal
“…we have spent the year transforming our approach and our process. ..we are bringing greater measurable value to our clients designed to manage total cost of risk for the mid-to-large size commercial insurance clients. A recent insurance study (RIMS) indicated that the total cost of risk insurance premiums represent 59% of the total cost. Our focus now is to work with clients to address 100% of the risk. We actually have trademarked our process."
Paula Worthing, PLDA Interiors, LEED, AP, Principal
“…the biggest challenge is too maintain our income…the economy is having a huge effect on our client’s ability to get the funds and lease procurements which of course filter down to us. We are trying to meet the challenge with a forward focus and creative marketing. We also are doing things to strength our in-house capabilities. Still, we need some luck!!
Carol Coughlin, President, Bottom Line Growth Strategies
“…Projecting revenue has been especially difficult for companies that have consulting projects. It’s hard to tell whether the ups and downs are cyclical or a pattern related to the overall economy. The past year was definitely unlike prior periods. For 2010, revenue projection will continue to be a big challenge. Some companies have hired business development people but are finding they don’t work for intangible service income like IT projects.”
Problem 3: Planning and Strategy is very tricky right now. While volumes have been written about this the response we heard in our words is, deal with it, do your best, and look for opportunities.
Representative Comments:
Jeff Whipple CPA, Mattos Pro Finishes, VP Finance
“…In two words the hardest thing we are dealing with is Risk Assessment - is it a time to be cautious or a time to be a risk taker to position yourself for the future? How do you sit down and really strategize the business especially when it comes down to longer term investments such as marketing programs or expansion?
We think that you have to be as consistent as you can be. If you were aggressive you still have to be somewhat aggressive; you can't do an about face and become ultra cautious since that would confuse both the market place and the employees.”
Michael Mercurio, Esq, Chair, Business and Real Estate, Offit Kurman
“…For my business (and for my clients), the biggest challenge is convincing clients that the world is not ending. This market place, though challenging, is replete with opportunities for business that are willing to take calculated risks….... grab market share, eliminate competitors, add effective product offerings, increase client loyalty as well as bootstrap into other opportunities. The best solution is for owners to listen to fellow entrepreneurial business owners who can provide real life wisdom as to what works….”
In summary - we are hearing loud and clear right now that it is important to manage cash, prospect and sell like big dogs, and to keep your eyes out for opportunity.
Watch for our mid-year poll in June. We are projecting a better market and perhaps even concerns about hiring again (we are optimists you know!). If you would like to participate, don’t wait for us to call…please contact us. We are small business junkies and would love to talk with you.
Thanks to those who responded to our 1st poll. Thanks a million.
http://www.harvestbusiness.com/
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