Creating Growth in the Slow Season
Rather than being a drag on your business, slow times can be valuable for refining your business practices and increasing profits in the months to come. Use the slower pace to:
* Evaluate lines of business. What products or services are profitable? Are there products and services that take an inordinate amount of time or resources but don’t contribute to the bottom line? Identify any loss leaders; products or services that might not be profitable alone, but bring in opportunities to sell highly profitable products and services elsewhere.
* Cull customer lists to encourage problem or unprofitable customers to use other providers. This can often be done with pricing rather than outright firing a customer. The key is knowing which customers are profitable versus the ones that aren’t. (If you don’t have a report that tells you this, we can help.)
* Assess whether your compensation structure is supporting your goals. Are your employees compensated fairly compared to the market? And just as important: Are they rewarded for the behavior you want them to focus on?
Here’s an example. If your commissioned sales force is paid on sales, they will sell to anyone who will place an order, slow payer or model customer alike. But if they are compensated based on collections or profitability, they may get more selective in their sales. The business’s profits will increase as a result. We’ll have more on how to make this change next month.
* Look at your organizational structure. Is there a clear separation of duties or do employee responsibilities overlap? Some redundancy is good, but too often we see businesses where it’s unclear where person A’s job description stops and B’s begins.
We worked with one company in which the controller had to sort out discrepancies between purchase orders placed by the project manager and the actual vendor bills. So the controller, who had no knowledge of the order placed, the pricing discussed, or the quantity delivered, was expected to resolve any problems. In this situation we shifted the responsibility back to the project managers, saving about a half-day of unproductive time for the business each month.
* Don’t skimp on repairs. Though we always urge you to be mindful of your expenses during your slow season, it’s important to support your business with the right tools. Repair worn out or damaged equipment that limped through the last season. Hunt for deals on new or replacement equipment. Plan ahead so you can purchase what you require and still have the reserves to ramp back up when your busy season starts. Consider the tax benefits of buying close to year-end as well.
When it’s used properly, the slow season can be a time of unexpected growth. You may find you get more done during the quieter days than you ever imagined.