The Survival Checklist

Category: Latest News Published Date Written by Paul Kennedy (Chartered Accountant & Business Consultant)

Paul Kennedy, a chartered accountant and business consultant, provides a useful checklist for businesses and entrapenurs alike. Helping you deal with customers, markets, management, budgets and more.

Customers

Listens to customers

New market segmentation needed: reinvent marketing strategy

Understand shifting price sensitivities (BMW 5 series gains at expense of 7 Series)

Simplified advertising, emphasis on reasons, core benefits but keep on advertising

Customer needs uplifting (fear appeals - counterproductive)

Innovation, best antidote to margin degradation

Recession , no time to hunker down, question-non core assets

Challenge fundamental assumptions of company business model

Recessions accelerate underlying consumer trends

Consider Internet advertising, digital media

Plan for recovery, have capacity and (HR) resource

Trend is towards lifestyle simplification , we own too much “stuff”

Dealing with uncertainty

Uncertainty a threat or an opportunity?

Presents opportunity to push through reforms especially in managing cash and working capital

In short / medium term concentrate on cash not profit

Attract and keep talented employees

How to create a culture that thrives on uncertainty?

Clear consistent and honest communication the key

Have a crisis plan in place

Flexibility essential

Uncertainty stressful, have social support systems in place

Fire fairly, openly and consistently

Management

Abandon outdated management practices

Identify early where fissures will emerge

End of command and control leadership, too much power in hands of the few

Embrace the “intelligent crowd”

Bring diversity into the team

Create flexible virtual teams through technology and mindset

Working from home, abandon old team habits

Create space, loose what’s not needed, experiment with new practices

How many face to face meetings are actually needed?

Strategy formation from the bottom up, trust the team

People

The lifeblood of business will be the motivation of remaining employees

Downsizing (loosing staff ) based upon fair, transparent and consistent decisions

Get employee input

Treat employees (and ex employees) with dignity and respect

Remaining employees are more committed and motivated

Refocus remaining employees on goals and purpose

“Mobilise” employees by embracing IT to stay connected and

Make work practices flexible

Use current market conditions to recruit high quality candidates

Consider contract workers

Cash and Treasury Management

Financial re-engineering (use reverse engineering!)

“Cash is King” centric. Ingrain a cash culture within company

All critical time lines are cash based

Return on Capital replaced by Cash realisation

Think beyond working capital initiatives involving restructuring the Balance Sheet, sale leaseback etc.

Get rid of non-core assets

Redefine profit and replace by cash generation

Link bonuses to cash collection not sales targets

Cash based targets and incentives aligned across all departments

All Business decisions considered in cash terms

Strategic

Good Governance and Transparency the hallmark

Keep Auditors on board

New financial relationships based upon Partnerships, banks customers, suppliers based upon common vested interests

Communication!

Think wholelistically, consider “Balanced Scorecard”

Know everything about your competitors

In short decide on a strategy for survival

Use strategic partnering with “competitors”, i.e. joint ventures sharing costs into new markets

Continue to build the brand

When credit crunch is over, don’t revert to bad old habits!

Budgeting

Strategic cost reduction rather than indiscriminate, think beyond the short-term

Understand your value added chain. Get rid of unnecessary links. Think Ryanair

All budgeting re based. (Zero based budgeting)

Regard all costs as variable

Cash centric, cash flow driven decision making

Accuracy, relevancy and timeliness of Cash Flows vital

Cost reduction not always the appropriate goal, Lada v Audi?

Sell, loose redundant / surplus assets

Reconfigure production/sales/finance cycle

Grab easy marginal profit and simplify. E.g. popcorn!

Paul Kennedy
Chartered Accountant & Business Consultant
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