Profit Covers Many Sins --- Cleaning Up the Mess

We certainly are in for tough economic times in 2009 & 2010. In reality, the economy is a mess. However, what we are facing is not at all unprecedented. We have faced it before and we have always come out of it stronger than before. We can and will do it again. We can as a country based on the free enterprise system---- we will clean up the mess.

Simply put, there are good times when things are going well and it's easy to make money, and there are bad times, when it's much more difficult to make money. Prior to 2008 we had a run of good times that exceeded most of our expectations. I have often said that it didn't take a genius to make money during that run. However, "Profit covers many sins". That means that many of us got a little complacent. Maybe we didn't quite run our business following absolute best practice. Maybe some of us overlooked less than the best performance expected from our employees. Maybe we were a little too compassionate regarding employee effectiveness and as a result we haven't "weeded the garden" to allow our good employees to flourish. Those of you who followed best practice and focused on cash management, debt management, risk management and leveraging your assets to maximize effectiveness are in a position to take advantage of the economic conditions that will present opportunities for market share growth.

Those Who Didn't

If your company is one that got caught in that viscous web of easy success and thought that prosperity in the market wouldn't end and didn't quite pay attention to basic best practice business acumen, It is a time to implement a fundamental strategy of ensuring that your sales and marketing assets are deployed as effectively as possible, and then working to improve the effectiveness of those assets. It's time to clean up your mess. In other words, it is time to focus. Focus on this unique window of opportunity to cut the non-profitable elements of your business and marketing system away, to pare down to dedicated and competent core employees, to sharpen the focus of every element of your process and system. This will allow you to expand your market share so that you can weather the hard times and be stronger when the economy inevitably turns.

What got us into this mess???

The fundamental mistake we have made as a country is, the thought that living beyond our means was an untenable right. We encouraged the focus on the acquisition of material things utilizing the easy credit that was available. Prompted by mortgage brokers and financial service companies who were motivated by selfishness and greed, hundreds of thousands of people bought homes and cars they couldn't afford, and pursued a lifestyle funded by someone else (the mortgage lenders and credit card companies). Millions of individuals now find themselves over their heads in debt. Some companies, driven by the same motivations, find themselves in the same boat. Instead of applying some of that profit to paying down their debt, investing in employees and investing wisely in the business itself, profits found their way into excessive bonus payouts and not just to the owners. Washington did the same thing. As a result, the country is trillions of dollars in debt. Now, the market has begun to speak and it is telling us that we must pay for those past sins. That is why we are seeing a significant economic downturn.

What will get us out of this mess???

I believe, (even though I am not an economist) that this new stimulus package will help but it is not the total answer. With the amount of money being spent we can't help but see some improvement. However, don't count on the government to solve all our economic problems. Someone once said-----"If you put the government in charge of the Sahara Desert we would end up with a sand shortage."

Government is not the answer. We are the answer. Business is the answer.

Now is the Time for Action....NOT... Panic - Ten Immediate Steps to follow in 2009

Profit covers many sins. We have all ridden the wave of prosperity for the past five years prior to 2008. Let's face it; it didn't take a genius to be profitable. You may have ignored small indiscretions, less than stellar performance, even incompetence. You may also have ignored structural issues, process issues, family issues and even corporate executive issues. "Profit does cover many Sins." So...... Now is the time to take action if you want to maintain market share or increase it during the economic crisis we are facing in 2009. 

• Make sure all your assets are deployed effectively -
• Find and Shoot your "Loser Customers". The easiest way to do this is to raise prices and quit giving away free services to the losers.
• Recommit and focus on profitability - cost control. Don't scrimp on revenue producing functions or process.
• If you have to make cuts - start at the top - kill the sacred cows. Take a close look at your executive team.
• Business survival comes first - compassion second and family nepotism last
• Invest in developing your structure, your process & your key people. Don't cut training for key people.
• Make managing your cash flow a priority. Understand and manage your cash to cash cycle. (E-mail rick@ceostrategist.com if you would like a copy of an excel cash cycle tool.)
• Focus on increasing market share by going back to basic best practice in sales effectiveness (targeting, goal setting, action planning & sales management coaching)
• Seek out opportunities in recruitment, vendor negotiations and exploit the competitions weaknesses
• "Weed the Garden" --- Upgrade your workforce by replacing those employees that have never lived up to expectations.

Remember.............This is Not the Time to Panic

Yes, there are economic problems, but there are also opportunities!  Leadership during these tough economic times is about not panicking, and that's exactly the message I want to get across... don't panic! Panic causes knee jerk reactions, and they're rarely correct.

Basic Best Practices

Take the time to review best practices as they apply to your business. Look at your processes, your procedures and your policies. Do they reflect good management principles or do they become a little spongy due to past practices?  Many salespeople do not spend enough time working on improving their sales skills and techniques. Sales training and development is the last thing you should cut when times get tough.  Increased market share will go to the salesperson who really understands why people buy and can help people make the right business decisions. This is called being a total solution provider and it is a "Best Practice". Success will only be limited by personal ability and the professional sales person who embraces best practice, incorporates targeting, goal setting and action planning as a way of life. They will enjoy a bigger share of the market and the business will gain market share in spite of the economic correction that is taking place in 2009.

Personally, I believe by doing these things you can not only survive but you can thrive by gaining market share and position yourself to accomplish great success in 2010 when the economic situation becomes much more favorable.