Tag Archives: business finances

Don’t Loosen that Grip: Resist the Urge to Relax Financial Controls

By John TschohlJohn Tschohl

The economy is improving, bringing with it a sense of optimism. That optimism, however, can be dangerous. All too often, it brings with it a tendency to breathe a sigh of relief and loosen your grip on the financial reins.

While it might be human nature to relax when things get better, it is not good business practice. The measures you put into place to control costs and reduce waste during the past few years helped you to survive; it would be foolish to discontinue them now.

While you certainly deserve to celebrate your survival of the recent economic downturn, if you want to continue that celebration into the future, it’s imperative that you maintain control of your finances. Competition at every level—from price to product to service—continues to be stiff, bringing with it the necessity to keep a watchful eye on spending.

Customers are not willing to pay higher prices just to keep you in business. Cutting costs and controlling waste, combined with exceptional customer service, are the keys to your continued success. When you offer high-quality products at competitive prices, you can pass those savings on to your customers. When you do so, you will attract new customers and keep current customers. You will increase sales and profits. You will thrive.

Sure, there are a few companies in the world that can charge more without any major repercussions. Disney and Apple are two examples. Their products and services are so superior that consumers are willing to pay whatever it takes to purchase them. That is not the case for most businesses, however.

In order to remain competitive—and viable—it’s critical that you reduce costs and pass the savings on to your customers. You can do so by taking these steps:

Be aggressive. Look for ways to eliminate waste in every department, keeping in mind that no waste is too small to ignore. Those small savings add up to major savings. Let me give you an example: If you have 1,000 employees working an average of 250 days a year, and those employees identify ways to save the company $1 a day, that is an annual savings of $250,000. Taking that a step further, if the company has annual sales of $20 million, at a 5 percent profit margin, this is the equivalent of increasing sales by $5 million.

Turn to the experts—your employees. They know where the waste is and can identify ways to eliminate it. Making your employees your partners in this process does two things: It will result in impressive savings, and it will send a message that you value your employees and their suggestions. And, when employees feel valued, they are more productive and more committed to the company’s success.

Look at people. Leave no stone unturned. Are there people who can be eliminated? Terminate under-performing employees; they cost the company money and do little or nothing to add to the bottom line. They also can cost you money by driving customers away with bad attitudes, lack of knowledge, and poor customer service skills. In many cases, those employees do not need to be replaced, which adds to the savings.

Look at technology. Technology can save you money by speeding up processes and improving customer service. The only technology I suggest you eliminate completely are telephone systems that require callers to go through an endless list of options before they can talk with a real person. Use technology only when it benefits the customer.

Eliminate ridiculous policies and procedures. Not only do they get in the way of providing good customer service, they cost you money because you need people to enforce them. When you eliminate those policies and procedures, you can eliminate the people you have hired to enforce them.

You can’t count on the economy remaining strong. You must do everything in your power to control costs and ensure the success of your company now and into the future.

John Tschohl, internationally recognized service strategist, is founder and president of the Service Quality Institute in Minneapolis, Minnesota. Described by USA Today, Time, and Entrepreneur as a “customer service guru,” he has written several books on customer service and has developed more than 26 customer-service training programs that have been distributed throughout the world. John’s monthly strategic newsletter is available online.

Three Market Trends That Will Affect Your Bottom Line

By Steve RichersonSteve Richerson

Global trends are like a river. Sometimes they are powerful, sometimes they are weak and sometimes they’re so mellow your business can glide along them like a leisurely, summer afternoon pontoon boat ride. Right now there are three big and scary trends that are not going to be a leisurely pontoon business boat ride. Prepare your life vests; we’re headed into the rapids.

1) Resource Roulette: The stress that global supply chains are under continues to make resource availability and access precarious and unpredictable. This in turn, makes it incredibly difficult for businesses to set prices, determine shipment dates, establish baseline costs, or create “Just In Time” (JIT) delivery timelines if those conditions exist.  If energy costs fluctuate wildly, if product shipments are held up thanks to global unrest or catastrophic weather events, or if resources we need for production dry up, it creates chaos and this affects your bottom line. There are examples of this all around us.

Coca-Cola is a soft drink; its predominant ingredient is clean water. If the company that makes it (Coca-Cola) can’t get or doesn’t have access to clean water (thanks to a drought or pollution, or some other factor) they can’t make something as simple as single can of Coca-Cola.   No clean water results in no Coke. Many southern states have had severe drought conditions for the past several years and this condition is being echoed around the globe. Resource Roulette, however, extends well beyond clean water.

Many global fisheries (thanks to overfishing and pollution) are depleted. Fishery depletion may not affect your business directly. You may never even think about global fisheries, but if you’re a fisherman, restaurateur, boat manufacturer, or if you supply materials for boats, transportation to fish markets or any other global connection to that industry, it will affect your business. We have always lived in one globally connected biological eco-system; we are now living in a globally connected economic system as well. From water to energy to raw materials, the impact 7 billion people and a short-term vision for how we use resources increases scarcity and unpredictability.

2) Amped Expectations: Modern consumers want their products to be quality, affordable and readily available, but they have now extended product expectations to the actual company itself. Consumers want the companies they do business with to be responsible for how they treat the environment, how they treat their local community and how they treat their own employees.

It seems that consumers around the globe have a hunch that 7 billion people can’t survive and thrive doing business the way it’s been done in the past. As a result, they’re demanding changes in the products they buy and the companies they choose to do business with.

3) Global Connectivity: We know that 21st century communication is decentralized, personal, fast, cheap and capable of becoming exponentially viral. For businesses, this connectivity is a blessing and a curse. The blessing: we can connect directly to customers all over the world via digital technology quickly, easily and inexpensively. The curse:  those same customers can do the same thing if they’re not happy with our performance.  They can do this quickly at no cost and if we’re not careful, its negative impact can grow exponentially and harm our company’s reputation.

In the modern world, reputation harm can mean financial catastrophe for companies.  Technological advances have made computers, a Wi-Fi signal, portable computers, inexpensive video cameras and smart phones available to mass audiences at a very low cost all over the globe. This has pushed an enormous amount of centralized message control away from corporations and toward consumers.  There was a time when networks controlled the only mass message pipeline. This is no longer true. If a company is doing a poor job according to the customer, in a matter of minutes they can shoot a complaint video, start a Facebook page, share a Tweet and before you know it, the bad news is everywhere.

Navigating The Waters: The best hope to navigate these treacherous waters is to reorient your business focus from a “profits only” bottom line approach (which has served us well, but no longer meets the needs of shareholders and stakeholders) to a “triple bottom line: people, planet, and profits” approach. Why? Because it meets these three trends head-on. Is this approach easy? No way. Is it important? Yes. Will it succeed? Probably, although there are no guarantees, but there’s no guarantee that any business strategy you pursue will be successful. To do nothing almost guarantees failure; the trends are too huge.

You can get started by asking a simple question: “Is this business decision good for the (1) Profits (2) People (3) planet?”

Many companies around the globe have already begun moving in this direction (others have jumped right into the river) and it’s paying off for their “bottom line” profits.  These companies have seen the rough waters ahead for global business and have committed to taking the smart and courageous steps to preserve their triple bottom line: people, planet and profits.

If your business is going to ride the rough waters in the 21st century, you must integrate sustainability into the way you do business because it’s what consumers want and it’s the path for true long-term business success.

Steve Richerson is a nationally recognized speaker and consultant. Steve utilizes his distinct presentation style to speak on the importance of sustainability and actionable guidelines to enact eco-friendly practices in business. As a member of the U.S. Green Building Council, National Recycling Coalition and the North American Environmental Education Association, Steve is spearheading the campaign to reduce wasteful corporate procedures and promote environmentally sound business methods. To learn more about Steve’s speaking, call 256-710-7216.