Monetary Wisdom - May 2009

By Charlie Ragland

During the economic downturn many businesses have retrenched, cutting expenses and trimming the work force. While this approach is necessary in an economic downturn, it may leave your business vulnerable as demand increases.

Now is the time to review your business model and make adjustments to position your business for future growth. The upturn will come, but are you prepared? This article considers areas of opportunity for business performance improvement.

• Evaluate your financial situation. Meet with your financial partners today and develop plans to support your future growth. Many bankers I speak with are concerned about how their business clients are going to qualify for future financing given the economic slowdown.

Banks are lending, but fewer companies are meeting the normal lending criteria. If your business has experienced a slowdown, your financials may be impacted. This change in financial position can impact your credit worthiness along with your ability to qualify for the additional capital to finance your business when sales return.

Many businesses are beginning to experience a pickup in demand for orders, but they do not have the credit line available to finance the inventory purchases necessary to secure the orders. Work with your financial partners in advance to develop a strategy to meet future financing requirements.

• Review your marketing message. How do you define your company and the services you provide? Do you offer value added services or low cost solutions? In today’s economy the value added, diversified suppliers of retail flooring solutions are faring better than the low cost retailer.

Identify diversification options that support your core business. Commercial products, in-home design, maintenance, blinds and other complementary products and services can expand your business footprint, providing multiple revenue streams to soften economic ups and downs.

• Understand design trends. Flooring retailers that define their business as part of the fashion industry are faring better than low cost suppliers of flooring materials that look at flooring from a more utilitarian perspective. Understanding surface trends in colors and textures can provide additional value to the customer.

• Continue to build awareness in your company to your target customer. Your potential customers need to know who they can turn to once they are ready to purchase floorcovering. If you wait until the economy turns, you could lose out to your competitors who have maintained their visibility. There are many ways to get the word out about your company, limited only by your creativity. Advertising and community involvement are two of the most tried and true methods but the Internet also offers many possibilities.

• Maximize your customer relationships. Do you capture your customer information and develop future marketing strategies that build on your existing customer relationships? Today customers expect recognition, convenience, information, and excellent service every time they interact with a company. The trend in marketing is to understand the needs of individual customers versus groups. Customer relationship management systems allow the flooring retailer to maximize its relationship with the customer and develop more customer specific marketing activities.

Consider customer relationship management systems developed specifically for the retail flooring industry. For instance, Floorlink.net software, offered by Floor Covering Soft, is a contact and sales team management system that targets flooring retailers, distributors and contractors who need to manage sales teams and multi-location operations. This software allows the flooring retailer to manage lead generation, conversion rates, and the sales pipeline with comprehensive lead and sales activity reporting. CRM Download offers a compilation of customer relationship management titles and is updated every month. Review the various titles available and select the best option for your business.

• Identify new opportunities for growth. Eight out of ten companies are looking for ways to increase sales. Is it time to shift from a focus on decreasing costs to a focus on increasing sales? Consider developing a systematic process for identifying, validating and executing new growth opportunities. Attending a Eureka! Winning Ways workshop can help.

Since 1986 Doug Hall has worked with corporate clients at Eureka! Ranch (www.eurekaranch.com), helping them make smarter choices for growth. Hall has developed a new licensed offering called Eureka! Winning Ways that helps small and mid sized businesses discover measurably smarter choices for growth. This program is available through your state manufacturer’s extension program (www.mep.nist.gov) and is not limited to manufacturing companies. This workshop will allow you to discover how to invigorate your team toward action and ownership, sort and filter ideas to identify those worth pursuing, develop a 30-day action plan that will make it easy to move ideas into action or kill them before they suck up more time and resources, and ignite the cycle of growth.

• Integrate your business software. Are your computer systems integrated? Do they provide the information that you need to identify and take advantage of business trends? Can you maximize your cash utilization by optimizing inventory, payables and receivables? Consider instituting an enterprise resource management system than integrates all the functions of the business.

Many software systems exist today targeting the flooring retailer. These systems will integrate your business functions and increase the availability of information to make timely decisions. Retail flooring management systems optimized for the flooring retailer are available from companies like RFMS and Dancik International. These software systems allow the user to fully integrate business operations from customer contact to invoicing, including all accounting features.

• Invest in your people. Traditionally, employees feel the brunt of cost cutting decisions. But the question arises about how you develop a competitive advantage without a trained and motivated workforce. Your people are your greatest asset, and their knowledge, customer relationships, and commitment will separate you from a low performing business.

Assess the qualities and capabilities of your workforce. Are there opportunities to improve knowledge and performance? Consider instituting a regular training program to upgrade your staff’s capabilities. It can be as simple as a monthly lunch and learn.

Design training programs in conjunction with your strategic plan, reinforcing the skills and capabilities of your employees. Training programs can increase the effectiveness and morale of your workforce. Select impact areas based on the strategic goals of your business and the development needs of your employees. Training can focus on skill areas such as business communication, customer service, software and support, product design, planning and estimating, selling and color, and flooring solutions.

• Impact what you can today. In this economic climate, use excess time and capacity to reinforce your competitive advantage for the future. Fine tune your marketing, financial, growth, operations, communications and personnel plans. Now is the time to position your business to capture the surge of pent-up demand that the industry will experience in the future.

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