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Positive Actions For Negative Times
By: Leigh Canavan, Danon Middleton and Marsha Londe
Issue: 2009sep
Now is the time to test and review your systems and processes
Distributors are tired of negative news and seek answers and actions to better position their businesses. The struggling economy is no longer news. Government regulations, technology and the economy are changing the rules. In working closely with distributor owners and salespeople, our company, Tango Partners, has firsthand familiarity with the challenges they face.
Recently we co-conducted a three-part Recession Survival educational seminar, a back-to-basics boot camp with solutions to positively respond to the financial strain our industry is experiencing. Each session covered a topic pertinent to current distributor challenges, with low-cost or no-cost action items designed to generate gross profit dollars, uncover potential profit pitfalls and provide the tools needed to create sustainable business practices.
In today’s world, distributors have two choices: deny the new reality or embrace it and move forward. By reviewing your company’s internal structure and processes and making appropriate changes, your businesses can emerge stronger, more organized and better prepared to operate in the business world as it exists, not as you wish it existed.
The first step is to explore hidden profit opportunities by cleaning up your offices—figuratively and literally. Mentally walk the halls and common areas such as the showroom, conference room and break room. Odds are you can identify areas to be organized and items to be sorted.
Similarly, there are ways to streamline everyday tasks. Think about your existing processes, technology platforms and overall way of conducting business. Start with an operational cleanup that will reduce both hard and soft costs:
1. Clean up your client contact database.
Information becomes outdated quickly, especially as positions are eliminated and contacts change jobs. Update your database every six months and you’ll also stay in touch with your clients and prospects. Though your clients may be in a spending freeze, be the one they remember when budgets open up.
Take action by:
• Running a report of your client list.
• Calling contacts to confirm their information is correct.
• Determining if your contacts are in a different position and asking about their responsibilities.
• Inquiring about others within the company who purchase promotional products.
Turn this cleanup exercise into low-cost marketing and new business outreach. While you have your clients on the phone:
• Inquire what they are working on, suggest ways to integrate product to improve the project or be the expert in marketing campaigns.
• Ask about upcoming events or activities and make a note to follow up.
• Promptly introduce yourself and your distributorship to any new contacts. Follow through with a packet of pertinent information, compelling collateral and, of course, a promotional product.
• Obtain permission to add their information to your marketing outreach. If you have an e-newsletter, ask if you can place them on the distribution list.
Your lean and clean client list will be a great start for upcoming promotional or marketing activities such as a self-promo mailing, invitation to an end-user show or even your holiday cards. With the accurate quantity counts and exact addresses, you’ll reduce mailing costs. You’ll warm up the relationship by introducing yourself, put refresh packages into the hands of past clients and even liquidate your self-promo closet.
2. Review your credit policy.
Create or update your company credit policy and credit approval process. Your clients’ prompt payments are critical to your cash flow. Unless there are contractual agreements, tighten your terms by requiring pre-payment for a new customer’s first order or for those with a slow payment history and enforce established payment terms for existing clients.
Take immediate action by:
• Cleaning up your receivables.
• Resolving past due invoices.
• Providing whatever documentation the client needs to process payment.
• Addressing any reasons for nonpayment.
• Determining the client’s creditworthiness for future business.
3. Implement a collections process.
Your collections policy should preempt clients’ delay tactics. Provide clients all the details necessary to process the invoice.
• Call your clients immediately after receipt of the invoice and confirm the product was on time, intact and well received. Confirm that the invoice details are complete, including the purchase order number. Answer any questions.
• Make another call if you have a chronically slow-paying client. Confirm the invoice was submitted for payment or verify the date a check will be issued.
• Have an escalation plan for when payment is not received in a timely manner. Start with the person who placed the order, the accounts payable department and possibly your contact’s superior. Outline who will be contacted upfront so you don’t waste days determining next steps.
Efficient receivables collection translates to a healthier cash flow. Put your earnings and profit into the bank faster and improve your credit rating and ability to secure financing.
4. Work with preferred suppliers.
Distributors are not the only ones experiencing cash-flow pressures—so are suppliers who are responding by requesting partial or pre-payments. Reduce or eliminate prepay requirements by focusing on preferred suppliers. Develop an official preferred supplier list for core products; in return for increased volume, request preferential service and pricing terms.
With improved pricing, boost your margin and make more profit or lower your pricing and secure more orders in bid situations. Purchasing departments appreciate negotiated relationships and want to work with a purchasing pro. Demonstrate that you pre-qualify your suppliers to provide high-quality product.
Help purchasing departments meet their goals of directing spend to minority or women-owned businesses. When you create your network, include diversity and then educate clients about the many ways your supplier partnerships benefit them.
5. Create sustainable business practices.
Businesses process orders; the key is whether they are doing so efficiently and economically. Conduct an internal audit of your current processes to identify profit-eating steps and touches.
Examine your processes and identify improvements in your human-to-human, human-to-system and system-to-system workflow interactions.
Break out the whiteboard, bring in the pizza and begin a tactical review of your processes. Walk your internal team through each step, action, touch, output, form and document related to their positions. Diagram your existing process with the team. Uncover implied policies and review written documentation for an understanding of what is actually happening.
Ask “why” to determine if a particular step is necessary. There is no right or wrong reply as long as the answer is based on a real business objective. Responses such as “That is how I was trained to do it” and “I have always done it that way” are not business objectives.
Proper integration of systems streamlines your workflow or process and reduces costs. Too often, businesses do not utilize their systems to the full potential. Do you touch an order more than necessary? A work-around weakens processes and increases mistakes and costs.
Form sustainable business practices. Document your re-engineered processes, detail the procedures and policies and train or re-train your staff on the correct methods. These processes, procedures and policies create a system. Performing systematic actions can be as powerful as a technology-driven system. Integrated systems combined with standardized processes can generate cost savings and increase your gross profit.
6. Brand your business and market yourself.
Businesses that focus on sales improvements and internal refinements will survive current conditions. After you’ve positioned yourself to function smarter, wiser and more economically, promote your improved processes, vendor relationships and capabilities to your clients.
For positive action—and reaction—during negative times, continue marketing. The same solution we recommend to our clients applies to our businesses. Demonstrate through direct mail, self-promotion and periodic reminders that the creative use of promotional products attracts attention and delivers results.
Now is the time to take positive action to combat these negative times. Brand your business as expert and promote your successes in your local business paper or in outreach to your clients. Through learning, changing and improving our businesses and operational platforms, we can navigate this changing world and become more professional in the process.
Leigh Canavan, Danon Middleton and Marsha Londe comprise Tango Partners (UPIC: TangoP), an Atlanta, Georgia-based consultancy firm for the promotional products industry.
404-846-1900
mlonde@tangopartners.net
Know The Lingo
A process is a series of actions or operations that are conducted to achieve an end result.
A procedure is the “how to”—the roadmap of steps taken in a regular and definite order to reach an end result. Procedures help achieve consistency in a process.
A policy is the rules or guidelines that support the procedures and ultimately the process.
Are You Optimizing Your Workflow?
Human-to-human workflow interactions are concerned with what each person does when generating work. What is that person’s role? Is he or she a receptionist, accounts receivable or order entry clerk or customer service representative? What tasks are performed? A receptionist answers the phone, sorts mail and manages office supplies while the order entry clerk enters orders and communicates with suppliers.
Human-to-system workflow is how the person uses systems in his or her work. A receptionist uses the phone system to perform while the AR coordinator and order entry clerk leverage Quick Books, ProfitMaker, SAP or another operating platform system to complete assigned tasks.
Written processes, procedures and policies are also a type of system as they provide structure and a systematic approach to generating work.
System to system workflow is systems interfacing without human involvement. A phone system automatically routes calls; an online store interfaces directly to the order entry platform.
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