Saving Your Way to Success
Saving Your Way to Success
The analyses of costs in all business are very important and benefits are to be achieved through these analyses. Large organizations should always be reviewing costs and looking for reductions. And even small organizations should engage in that activity every three or so years. For example, I know some small companies that have reviewed the number of cell phones they had and the plans they had contracted for each phone. They were shocked by the savings they could achieve by determining which employees should have phones and what plan they should have. And why should an employee who uses the phone infrequently have a plan with a high level of minutes or vice versa?
There have been quite a few studies made on activities that result in profitability improvements. Most of the studies came up with basically four approaches.
1. Costing cutting. Review all cost elements of the past few years, analyze and initiate reductions where necessary.
2. Increase sales to existing customers. Put much effort into contacting existing customers and determining what additional current products or services you can sell them.
3. Increase sales to existing customers by adding value to your service or products. This can encompass many activities. You can simply “supersize”: sell more of the same thing. You can upgrade your product or services. Add new products or services. Or just increase pricing.
4. Find new customers.
Where is the real money? Cost cutting is the easiest, but will probably have limited success on the bottom line. We all can remember “Chainsaw Al” Dunlap. Where are his companies today? The hardest is finding new customers, but that activity will definitely yield the most significant long range improvements. If you do not constantly seek new customers, you will lose ground. Everyone has attrition with their customer base. Customers can go out of business or get sold/acquired, a competitor of theirs buys their business, they replace your product or services with a newer model/concept, etc.
Real-life example
Earlier in my career I worked for a Fortune 500 manufacturing company. Like many of the large corporations at that time, we contracted with one of the best know strategy consultants. Their major emphasis was cost reduction. I was the company liaison with these consultants. We spent a couple of years analyzing costs and facilities and making many presentations across the country to company officials. Major cutbacks were made including plant closings. During this entire episode, no emphasis was made on developing new products, product lines or technological product improvements.
The cost analysis was necessary and achieved benefits. And many studies were done to bring in new technology to improve manufacturing efficiency or information flow. Unfortunately, the focus on the top line was lost.
What happened to this company? After consultants exited the company, more plants continued to be closed. This time is was for the lack of business. Later, the company had to fight off an unfriendly bid, was privatized, and later declared Chapter 11. The remainder of the company has now been absorbed by a major buyer of distressed companies. It is still functioning as a trade name, but its product offerings are a small percentage of its earlier product lines.
The company still probably would have had many problems, but the lack of the sales effort definitely accelerated its demise. It is only a player in today’s market because it has developed some proprietary lines that have given it a niche. What if that product development was being done during the cost cutting years?
What should you do? While you always need to monitor costs, the emphasis must be on the top line and getting new customers. Consider giving your sales staff an extra incentive to attract new customers at acceptable pricing. Push them to work on existing customers and develop new products or services and give incentives to them for this activity also. Everyone, especially sales people, is motivated by incentives. Give your sales staff a targeted number of prospecting contacts to visit each week. All of the above approaches work, but the attraction of new customers will result in the best bottom line. Entrepreneurs must place priority on the top line, not the bottom.
Bill Boyer is the President of CEO Focus, a coaching organization- for small company CEO’s. He can be reached at bboyer@ceofocus.com or 757-233-2577.
Saving Your Way to Success - To learn more about this author, visit Bill Boyer's Website.
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How many times have you heard or read that a company has initiated cost savings plans as the way to achieve a turnaround and to restore the level of profitability and success they previously had? We all have countless memories of these activities and unfortunately many of us have been caught in “cost reductions”.
The analyses of costs in all business are very important and benefits are to be achieved through these analyses. Large organizations should always be reviewing costs and looking for reductions. And even small organizations should engage in that activity every three or so years. For example, I know some small companies that have reviewed the number of cell phones they had and the plans they had contracted for each phone. They were shocked by the savings they could achieve by determining which employees should have phones and what plan they should have. And why should an employee who uses the phone infrequently have a plan with a high level of minutes or vice versa?
There have been quite a few studies made on activities that result in profitability improvements. Most of the studies came up with basically four approaches.
1. Costing cutting. Review all cost elements of the past few years, analyze and initiate reductions where necessary.
2. Increase sales to existing customers. Put much effort into contacting existing customers and determining what additional current products or services you can sell them.
3. Increase sales to existing customers by adding value to your service or products. This can encompass many activities. You can simply “supersize”: sell more of the same thing. You can upgrade your product or services. Add new products or services. Or just increase pricing.
4. Find new customers.
Where is the real money? Cost cutting is the easiest, but will probably have limited success on the bottom line. We all can remember “Chainsaw Al” Dunlap. Where are his companies today? The hardest is finding new customers, but that activity will definitely yield the most significant long range improvements. If you do not constantly seek new customers, you will lose ground. Everyone has attrition with their customer base. Customers can go out of business or get sold/acquired, a competitor of theirs buys their business, they replace your product or services with a newer model/concept, etc.
Real-life example
Earlier in my career I worked for a Fortune 500 manufacturing company. Like many of the large corporations at that time, we contracted with one of the best know strategy consultants. Their major emphasis was cost reduction. I was the company liaison with these consultants. We spent a couple of years analyzing costs and facilities and making many presentations across the country to company officials. Major cutbacks were made including plant closings. During this entire episode, no emphasis was made on developing new products, product lines or technological product improvements.
The cost analysis was necessary and achieved benefits. And many studies were done to bring in new technology to improve manufacturing efficiency or information flow. Unfortunately, the focus on the top line was lost.
What happened to this company? After consultants exited the company, more plants continued to be closed. This time is was for the lack of business. Later, the company had to fight off an unfriendly bid, was privatized, and later declared Chapter 11. The remainder of the company has now been absorbed by a major buyer of distressed companies. It is still functioning as a trade name, but its product offerings are a small percentage of its earlier product lines.
The company still probably would have had many problems, but the lack of the sales effort definitely accelerated its demise. It is only a player in today’s market because it has developed some proprietary lines that have given it a niche. What if that product development was being done during the cost cutting years?
What should you do? While you always need to monitor costs, the emphasis must be on the top line and getting new customers. Consider giving your sales staff an extra incentive to attract new customers at acceptable pricing. Push them to work on existing customers and develop new products or services and give incentives to them for this activity also. Everyone, especially sales people, is motivated by incentives. Give your sales staff a targeted number of prospecting contacts to visit each week. All of the above approaches work, but the attraction of new customers will result in the best bottom line. Entrepreneurs must place priority on the top line, not the bottom.
Bill Boyer is the President of CEO Focus, a coaching organization- for small company CEO’s. He can be reached at bboyer@ceofocus.com or 757-233-2577.
Saving Your Way to Success - To learn more about this author, visit Bill Boyer's Website.
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Dianne CramptonDianne Crampton is an executive leadership coach, team culture consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here. Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009. Her new book TIGERS Among Us: 5 Winning Business Team Cultures And Why, Three Creeks Publishing will release in March 2010. To receive publishing discounts, subscribe to the free TigerTracks Newsletter here. - Visit Dianne Crampton's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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