Balancing Business and Law Blog

Grow Your Business Now? Are You Kidding?

February 09, 2010

Our guest blog post this week comes from Bob King of C.O.O. Services. Bob will also be our guest presenter at our "Ready, Set, Grow!" workshop on February 24.

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Grow………are you kidding me?

No kidding. Now is the time to prepare to grow. If you survived 2009, congratulations... you know how to lead through a crisis. The next question is: Do you know how to switch from crisis mode to growth mode?

A businesses ability to grow is directly tied to the strength of its foundation. That foundation can be described as the 3 Cs. Capital, Competence and Confidence.

Capital: Does your business have the capital necessary to grow? What is ‘capital’? Loosely defined…….it means available cash. This can be in the form of cash in the bank, cash available from lines of credit or other borrowing facilities, operating margin, or, it can be properly managed working capital. Without the proper amount of capital, a business can not grow. How ready are you to grow from the perspective of the first C?

Competence: You’ve cut to the bone. Maybe even into the bone. How ready are your employees to move into growth mode? How will you retain them? Do you have the sales force ready to grow? What about employee retention? A company’s ability to grow successfully has always been tied to the competence of its people. As a result of the actions many companies had to take during this recession, many employees are tired, scared, and uncertain. They have seen coworkers lose their jobs. Family members are out of work. Retention of key employees is more important than ever. As the economy picks up, they will have more options. What are you doing to improve your company’s second C?

Confidence: As a leader, your company’s ability to grow is directly tied to your confidence level. Do you have confidence your company’s foundation? Confidence in your people? Your products? Your clients? Your markets? Your balance sheet? Without confidence, your growth will be stymied.

Where does your company sit on the 3 C scale? Are you ready to grow? As the leader of your company, you are responsible for putting your company on a firm foundation…….a foundation from which to grow.

If you have the 3 Cs, 2010 can be a growth year.

Beyond Survival Mode...

February 01, 2010

I hate to state it again because we all know it already: 2009 was a rotten year for most, with very limited cash available to do anything. The media and consumer confidence indexes, though, suggest that things are turning around – spending has increased, money is coming in the door, and receivables are decreasing rather than increasing. Yet some financial experts still project a “correction” sometime in 2010. As business owners, we want to be confident, we want to be growing… but having been burned badly over the past 18 months, we’re very reluctant to jump in feet-first. Last year proved that we needed money in the bank. Yet growth requires us to spend toward marketing, increasing inventory and capital expenditures. What’s a company to do?

1. Marketing. It is critical to be “out there” and “on message” in this climate. You want to reach your target customers in a way that they hear you over the din of the others. Invest time in understanding your company’s vision, mission, target customers, and messaging so you can connect with them every time. From there, take advantage of the amazing results that can be accomplished through inexpensive or free marketing tools available. These include do-it-yourself public relations, e-zines, newsletters, and social networking. Determine how to reach your target customers using these tools and learn about best practices to maximize your efforts. These efforts will take time (a precious resource) but not a lot of cash (a more precious resource in most cases) and, if done thoughtfully and strategically, will generate results for your business.

2. Savings. When contemplating expenditures to fund growth, make sure your business maintains a certain buffer of cash. The companies that suffered most during the downturn did not have sufficient (if any) savings to buffer against the impact of the recession. If we find ourselves in a 2010 “correction,” we can expect at least a few months’ impact to business activities. Have 3 months worth of expenses in cash that can support the short term business needs should you need it.

3. Cash Flow. A critical part of managing cash is to monitor cash flow constantly. If you have debt or high accounts payable figures, consider how you might negotiate payments to better match your receivables. Another simple solution that many businesses neglect is to bill customers for products and services provided and offer incentives to pay early. A classic example is that credit cards often cost a business in processing charges but results in much more rapid payment by customers. Also consider other ways to ensure you are paid including personal guarantees and maintaining credit cards on file for customers.

4. Operations. To keep the savings on track, you must find the cash for growth from other parts of your business. Take a careful look at where you can shave off costs to become a leaner, meaner organization – even if you think you’ve already shaved to the bone, take a second look or, better yet, get a third party to do so. You might be surprised at what they’ll find.

5. Legal. Legal planning is an important tool in driving growth into a business. Firstly, corporate structure, insurance and contracts all work together to protect the business from potential risks and the owners from the risks associated with the business. These are easy yet critical steps to protecting a business in any type of market. Secondly, business relationships are the most substantial risks businesses face. Each critical relationship should be documented to outline the roles and responsibilities of the parties and to limit the possibility of disputes turning into costly litigation. The planning part is typically not overly expensive and the cost of executing the plan can often be managed over time to manage budgeting against business need.

My experience with clients and my own business generated these ideas for you. Each week during February, we’ll have a guest blogger share their knowledge and experience in each of these areas to offer you additional insights and thoughts on how to move from survival to robust growth to stand out from the crowd in 2010!

An XSIVE 1 STUDIOS™ creation.