'Remaining Competitive and Profitable' by James Johnson, Millatec Pty Ltd
Now is the time as an owner of a small or medium enterprise to move back into the coalface and be involved in all facets of your business. As a business owner, no one spends less money, identifies opportunities to improve productivity more or reduces waste better than you.
In the current economic climate it seems especially pertinent to discuss tools that can help you remain competitive and achieve break-even or be profitable.
The four key areas are:
- Human resources
Controlling your finances
When it comes to managing your finances, structure is vital. It is imperative that you plan your cash flow on a week-to-week basis to ensure debts can be paid when due. Ensure tax liabilities are allowed for. If you can’t meet your payment dates, talk to your creditors or the ATO: most will work with you, but they will take action if you are not open and honest.
To effectively monitor spending and avoid unexpected cash flow shortfalls, your financial reporting needs to be up-to-date. An ideal target is end of month plus 10 working days. To ensure reporting and recording is useful, filing of all financial transactions – including accruals – is vital.
A network of support is fundamental to the sustainability of your business. It is important to establish and maintain an open and honest relationship with your bank – during times of profit and of loss. The bank will understand the long-term fluctuations of your business and will be your best source of information on current services that suit your needs. Remember, banks do not want to see you go out of business – they will help you stay afloat.
For example, they have developed a range of new products to help with cash flow.
The current economic climate is a great time to negotiate for better deals – from freight to materials – and it is an ideal time to negotiate new leases.
Human resources: maximising productivity
Employees are the bones of your company. Have high expectations of your staff and make them known. Just as important as setting a high standard of work is letting your staff do their job and being flexible enough to make them want to stay. At the same time it is advantageous to not have any staff member who you are afraid to lose: no one should be irreplaceable.
A large part of managing human resources is managing risk. Employee training is invested time and money. Maintaining low staff turnover means retention of knowledge within the company and makes thorough training a valuable investment.
Marketing: sending the right message
If you want to maintain and grow sales, first and foremost be a marketing company. Invest in marketing as you would a new machine: work out the investment and expected return and research what is right for your business.
It is a great time for change so try the things that you have been putting off during busy periods.
The key is remembering that sales must lead production, and production must support the promise. This is a constant battle: they both need – and work just as hard as- the other. This needs to be reinforced daily.
Linking systems together means you maintain control of the business. Report and record weekly, monthly and quarterly. This not only helps in tracking financial movements but also ensures that in the instance of staff absence, the system will remain functional.
Linking the following systems is a good place to start:
- Quoting (capture all costs)
- Processing orders (no job starts without a written PO)
- Producing job cards
- Purchase orders (nothing gets in without one)
- Time capture (measure productivity)
- Invoicing (nothing gets out without one)
- Financial accounting
If you have had a crippling 12 months, it is not too late to recover and come out stronger, wiser and more profitable.
This article featured in Australian Stainless magazine - Issue 46, Winter 2009.