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Tactics for Tough Times

Tactics for Tough Times. A BDO presentation Stephen Graham 5 March 2009. Knowledge. How much do I really know about my business?. Two Essential Questions. What areas of my business are making me money? What areas of my business are costing me money?. Take the cheese and survive!.

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Tactics for Tough Times

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  1. Tactics for Tough Times A BDO presentation Stephen Graham 5 March 2009

  2. Knowledge How much do I really know about my business?

  3. Two Essential Questions What areas of my business are making me money? What areas of my business are costing me money?

  4. Take the cheese and survive!

  5. Overview • Knowing your products and customers • Knowing your suppliers and financiers • Know your costs and how they are working for you • Know where you want to go

  6. Know Your Customers Identify Good and Poor performers Focus on Debtor Days Get key supplier status (but may cost you discounts) Diversify your customers Retain key customers and sell more to them

  7. Know Your Customers Customers need work - just like everyone else. Building relationships builds loyalty Be Savvy – understand how they think, feel and what they need. Listen to them. Be Proactive – anticipate what your customers will need next and offer solutions before they have to ask. Recognition – each customer is different. Chemistry – why would someone come to you if they don’t like you?

  8. Know Your Products/Services Boston Matrix

  9. Know Your Products/Services What are my Cash Cows, Stars, Dogs etc? Watch stock levels (stock turn) Resist the urge to “fire sell” stock How long is it taking to manufacture stock? Review pricing strategy - Have numerous pricing models

  10. Know Your Suppliers • What are my credit terms and limits. If I give you key supplier status, will I get: • Discounts • Better delivery times • Free Freight • Extended credit (say 45 days) • How secure are my suppliers? • Talk to them. Chances are they are going through exactly what you are. • You never get what you never ask for.

  11. Know Your Financiers • Banks/Shareholders • What are their expectations? • What is my facility with the bank? • Prepare Targeted and Timely Reports (in anticipation) • - Essential to have up to date information • - Be forward thinking, Budgets, Cash Flow Projections • - Monitor the right information • - Understand your financial information • Keep them informed.

  12. Know Your Cost Structure • What are my costs and when was the last time I reviewed them? • Don’t automatically cut marketing costs – you may need to rely on these for competitive advantage. • Spend more (as long as it is in the right areas). • Review your lease • - Can this be renegotiated? • Am I utilising the space effectively? • Understand your variable costs and the affect these have on your margins. • Do I have surplus assets? • Get your staff involved to identify cost saving areas

  13. All the above affect cashflow

  14. Inventory Conversion Period Receivables Conversion Period Purchases Credit Cash Conversion Period DAYS 30 Cash Paid for Materials 5 Raw Materials Purchased 95 Finished Good Sold 155 Cash Received for Sales Cash conversion period

  15. Inventory Conversion Period Receivables Conversion Period Purchases Credit Cash Conversion Period 45 Cash Paid for Materials 5 Raw Materials Purchased 60 Finished Good Sold 90 Cash Received for Sales More Effective Cash Conversion Period

  16. Know Where You Want to Go • Two More Questions • How am I going to get where I want to be? • Plan ahead (say 3 years) • Need flexibility in order to adapt and change quickly • Who is going to help me? • - Recognise that no one can do it all by themselves.

  17. A strange phenomenon of a recession…….. Time You may find that you have more time to focus on these suggestions. Indentifying what are the most profitable areas of the business and doing more of that and less of the least profitable areas.

  18. Remember the Basics • Match customers’ needs and wants with your products or services • Meet directly with customers, gain their trust and sell • Choose the best pricing strategy and consider using price innovations • Make it easy for clients to buy • Develop an awareness of competitors and build sources of competitive advantage • Evaluate and develop the performance of sales teams i.e get more from your people. • Review costs and understand cost structures

  19. Remember the Basics (contd) • Manage debtors, purchasing, overheads and creditors • Demonstrate a desire to learn, not blame • Encourage people to find cost savings • Communicate and keep people informed Above all, keep your head.

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