As we draw closer to the end of 2009, there are those who say good riddence and look forward to 2010, but what have they changed to expect a better year? My advice to those seeking a better year is to take full inventory of 2009 and chronicle the good, the bad, and the ugly. What things went well and why? What went horribly wrong, and how many situations you had no idea how you arrived there. We all know the very definition of insanity is doing the same thing and expecting a different result, so my question is how insane are you?

On many fronts our nations is facing monumental change, some for the better, but most to our ultimate detriment. What are your strategies based on the curent political climate, potential government intervention, higher taxes, employer mandates, etc.? Will you be able to survive should corporate taxes exceed 40%? What eill be the affect on profitability if you are forced to pay 100% of healthcare costs for your employees?

Before we get too deep into the political aspect, let’s start with the basics. How did you business sector fair in 2009? Were there any major competitors who entered or left the game? How did profitability fair over the past eleven months? Did the slowing economy have any affect on your supply chain? In my observations, 2009 was a year many company decided to comp the dollars from 2008, even if the profitability was down as much as 60%. While this may keep the stakeholders happy, it is not a sustainable business model. Unless there has been a technological innovation that allowed your company to not only purchase inventory cheaper, but receive and distribute your product, the point of diminishing return is looming around the next corner.

Your 2010 strategy shoud begin with a spreadsheet showing sales for 2008, 2009, and your projections for 2010. In each segment of your business analyze the progression from 2008 to 2009 and notate any factors that were different from your projections for 2009. For example, if a major disributor of a crucial component of your product has gone out of business, factor in all related costs of merchandise that need to be serviced, finding a new vendor, retooling your supply chain to include the new vendor, etc. Next, take a look at the budgeting for that segment and once again notate occurences outside of your projections and their causes.

From this point you should begin re-examining you client base. Has the shft in the economy introduced new consumers to your product or has it reduced your base? Has there been a change in the needs of your traditional customers or have they remained consistent in buying patterns? The start of a new year can be a great time to evaluate your product mix and analyze each item to determine its continued existence. Once this determination is made, revisit your 2010 projections and see if it changes.

Finally, we move to marketing. How effective were your campaigns for 2009? Were there any breakthroughs in reaching your client base? How did your marketing differ from your two top competitors? How was ROI in the various marketing and advertising mediums? As you plan your 2010 marketing budget, what will you do differently and why? What empiricl or historic data shows the need for adjustment and what causes you to believe it will work?

Of course, this is just a brief overview to get the wheels turning. This conversation would be too lengthy for this forum, but I hope it will challenge you to make 2010 the year it should be (hope need not apply).

Thought of the Day, Process Analysis | No Comments »

One of the first questions I ask business owners is What is Marketing? The typical response is a perfect description of advertising, but the concept and importance of Marketing is usually something that has neither been taught nor researched. Webster’s Online Dictionary (2007) defines "marketing" as the process or technique of promoting, selling, and distributing a product or service.

If you have spent any time reading my previous posts you will notice a recurring theme when it comes to business development. That theme is "Marketing is the Key", from product development, inventory analysis, process design, product pricing, and advertising. 

The purpose of this post is to underscore the importance of thinking as a marketer and not just a business owner. Once you are able to put on your "marketers goggles", you will begin to make better decisions on how to best fulfill your customers needs and clearly see how every effort toward that end affects your business.

A marketer understands the marketplace is always changing and customers tastes are as inconsistent as the weather. Therefore, as I mentioned in the previous post, you must always be watching for changes, whether product trends or consumer trends.  

Putting on the marketer goggles also allows you to be more objective when designing ad pieces, stationary, logos and other visual media. You will begin to ask yourself what message does this piece send? Does it allow your target markets to know you have the solution to their needs? Does it speak to the concerns and beliefs of your consumer? Does it brand your company as someone they want to do business with?

Finally, your marketer googles will help you analyze your business practices and processes to determine if every effort is being made in turning out the highest possible quality for your customers. By walking through every process from sales to shipping and receiving, you create a relationship between each stage of the processes and all of those who take part in delivering your finished product.

You will begin to question if your packing material compliments your company’s packaging or if UPS has a consistent enough record to trust your merchandise in their hands. Remember everything involved in your business represents your business and looking at every aspect through your marketers goggles will not only heighten your chances of fulfilling your business goals, but will provide your customers with a product that is inciteful, thoughtful and considerate of their needs. 

Business Development, Process Analysis | No Comments »

We as business people and entrepreneurs tend to dwell on revenue generated by our daily pursuits. We focus on increasing sales and market share, but what about profits? When our daily routines produce profits for the company what happens to them? The first thought is expansion, retiring debt, increasing employees and inventory, but what is your plan for getting your money back out of the business?

Have you designed a budget that allows you to return the intial investment made by you and/or others? It is not sacrilege to pay your principles from the profits of the company…you just have to include it in your budgeting, which really the point of this post.

Budgeting can be as effective in increasing profitability, as your sales and marketing strategies. Too many times businesses do not maintain a written budget that accounts for all expenditures. This leads to unnecessary expenses, redundant practices and a lack of competitive pricing for services, materials, and supplies.

When setting up your budget, be sure to use a spreadsheet or an accounting program that allows you to determine what percentage of revenue each expense represents. This will give you a basis for analysis of expenditures to determine if best practices are in use in areas such as purchasing, employment costs, and debt repayment.

Once your have established your budgeting protocol, analyzed your expenses, corrected any irregularities or needless practices, it is time to budget for the coming year. This is where you begin paying yourself and/or other stake holders. Be sure to consult with your CPA (because I know you have one), to make sure your allocations are in line with IRS standards and set a repayment level that is commensurate with your rate of growth and profitability.

Finance and Investing, Process Analysis | No Comments »

Quality Improvement is one of the cornerstones of a successful business. It creates a organizational culture of innovation and empowerment, but most importantly strengthens the relationship between producers and their customers. Achieving a high quality philosophy through total quality management takes more than just striving to be the best. Every facet of a company’s existence must be dedicated to providing an ever-changing, ever-growing system of processes that incorporates upper managements vision with employee execution and customer expectation. This philosophy is best executed by a strategic plan that clearly dictates the company goals and expectations and provides every employee with a clear understanding of how total quality will be achieved.

Management, Process Analysis | 2 Comments »