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Getting Through 2008 ... and Beyond

Barry S. Cain, JD, CMC, Managing Director, Strategic Services
bcain@BlackmanKallick.com, 312-980-2976

David B. Spitulnik, Director, Strategic Services
dspitulnik@BlackmanKallick.com, 312-980-3339

Let's face it—2008, and possibly 2009, are going to be challenging at the very least, perhaps even worse if the economic climate continues to turn against us. Economists continue to argue over whether we are in a recession. Independent of their answer, business conditions have, in many cases, already taken a turn for the worse.

So, what should a business owner or CEO do in this environment? One option would be to continue on as before, but to what end? Moving forward without a full understanding of where you want to take your business might not be productive overall and might even be adverse to the long-term interests of your business.

The following are thoughts and planning ideas for business owners and CEOs to consider in these times of uncertainty. This is not intended to be an exhaustive list. Rather, it is intended to be a starting point to help prompt planning and follow-up actions coordinated to assure short-term stability and longer-term prosperity. While this is directed toward owners and CEOs, we're intentionally giving this broader circulation because whomever the initial reader, everyone in a business can and should become sensitized to the challenges and possibilities facing businesses today.

Leadership and the plan

Your organization looks to you for leadership. Have you articulated a plan for the year or just started cutting costs? Does your action plan for this year tie in to a longer-term vision? While thinking about the future now might seem like a luxury, spending the extra time today will serve you well in the coming months.

By communicating the path you want to follow and how and when you want to get there, you are more likely to enlist the full support of your management team. In fact, by fleshing out the details of your plan with them, it is more likely that the members of your team will come up with suggestions that will make your plan even better. As you are preparing for the short-term, you need to ensure that the actions you take now tie in to the longer-term vision of where you want to take your business.

One of the common areas of miscalculation in business is that sharing the near-term plan is all that the team needs. Are you open to talking about what happens beyond the storm; what your vision is for the future? When you talk about both the near-term and the future plans in concert, not only is the light at the end of the tunnel more visible, but your team will also be able to begin to prepare for executing into the future. This will give everyone the opportunity to coalesce around your vision and to share your sense of purpose.

At the same time, consider setting both short- and longer-term performance goals for individual team members to help align the company's and each team member's objectives.

Thinking about your business

1. With your plan well understood, do your customers fit in to your plans? While it might seem counterintuitive, if you can graciously "fire" a customer, you might be doing both them and your business a service.
   
   At the same time as you are evaluating your current customers, are you paying attention to other potential customers?
   
   In furtherance of your plan, is there a new set of customers that you can attract based on the refined sweet spot that you have now defined?
2. Have you analyzed your customers so that you know which are the biggest and the smallest? Do you provide the same level of service at both ends of the spectrum? As you analyze your customers, you need to keep in mind that you have limited resources. By focusing on your sweet spot, you will be able to extract more value from those who provide the most to you.
3. When you consider customer size, are you looking at profitability as well as revenue? Again, you might find when you go through this analysis that the customer who is adding the most to the top line, might also be taking the most from the bottom line.
   
   What actions can you take to remedy this situation? Does the customer bring other benefits? (e.g., introduces you to other customers?)
4. Concurrent with your customer analysis, have you thought about which are your 10 biggest and smallest products, both in terms of revenue and profitability? When you look at your product portfolio at this level of granularity, you might be surprised again to find that your biggest sellers are also the loss leaders. Is this a strategic imperative or an accident? Is it possible that by pruning the product portfolio, you will also be able to increase profitability even on lower sales?
5. Are there other opportunities created in the market as a result of the downturn?
   
   Have some previously unavailable customers become available because of downturns in your competitors businesses? Are there opportunities to acquire companies or product lines at advantageous prices?
6. From the standpoint of your current business, are you and your team doing things that are mission critical or are some of the activities done just because they always have been done?
   
   As a simple example, take a look at the reports that are generated. Do they add value or are they no longer relevant? If they aren't relevant, then stop preparing them. If they are relevant, do the people who need to see the results see them and take action based on what is shown?
   
   While you are in the process of reviewing the operations, have you also started assigning priorities to what is being done?
   
   Have you differentiated your most critical initiatives from others that would be good to achieve, but will not clearly impact results in a meaningful way? If you haven't, time, energy and focus will be diverted and important opportunities could be delayed or lost altogether.
   
   Have you developed scoreboards to measure progress, keep mission focus and help keep energies and attitudes from flagging?
   
   Do you celebrate successes along the way?
7. Have you taken a hard look at your organization's structure and your people? Do you have the optimum structure to support your goals? Do you have the best people in the right positions to help you achieve them? Are there problems in the organization caused by individuals that you have neither had the time nor the interest to address?
   
   It is often feared that by cutting people, everyone else's workload will increase. However, if the person that is let go has detracted from achieving the mission of the team, the termination might actually improve morale and productivity.
   
   Are you consistent in both your actions and your messages to help maintain focus? Are you holding people accountable for achieving their assigned responsibilities.

We've all heard the statement that "when the going gets tough, the tough get going!" These are becoming tough times for business. What are you going to do and when?

Blackman Kallick has the strategies and resources to help your company sustain its competitive edge during the uncertainty that lies ahead. We look forward to our discussions with you on this matter. To discuss your situation, please contact Barry Cain, David Spitulnik or your Blackman Kallick representative at 312-207-1040.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.