Could the existence of the present economic downturn and its impact on your business provide an opportunity to have a more successful business in the future?

 

This blog is the second of a three part series exploring the impact and actions taken by businesses to survive the past few years of economic downturn and the potential opportunities and lessons learned that may assist your business in the future.

The business and economic hardships most businesses have endured over the last 2 years has caused many businesses to fail as well as significantly retrench. While this deep and lengthy recession is still affecting many businesses there are signs that perhaps the worst is over.  In this part two of this blog series I will address the re engineering of processes and cost containment many companies underwent  in order to retain customers and meet fixed operating costs to survive an immediate and severe loss or pressure on revenue.

The loss or potential reduction of business activity with a customer or customers has required business owners to immediately focus on ways to reduce costs, review existing methodology and to find ways to provide the service or product in the most cost effective manner.  The issue before all of the business owners now is whether these revisions, cost-cutting measures and higher efficiencies are a reaction to difficult economic times or how they should have been conducting business in the past and into the future.

Most businesses tend to become somewhat inefficiency during prosperous times. We hire additional staff even if we are not at optimum efficiency and productivity in anticipation of continuing to grow the business.  For companies providing a product we may increase our level of inventory to provide faster delivery of products to our current and future customers. With increased costs comes greater management of these resources which translates to more meetings, increased administration and reduced strategic management. As the economy begins to improve, each business owner should engage in a critical analysis of how they will conduct business in the future.  Could some or all of the steps taken during this downturn continue to be employed by the company without affecting service and future growth?  Could expenditures coincide with specific growth rather than anticipated growth?  Many successful companies delay expenditures until the company reaches a specific level of slight overcapacity in order to ensure that each additional staff member hired can reach high productivity sooner.

The last two years have been very difficult for many companies yet the lessons learned could make our companies stronger in the future.

Written By: Michael Janicki

www.janconsultinggroup.com

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Could the existence of the present economic downturn and its impact on your business provide an opportunity to have a more successful business in the future?

 

This blog is the first of a three part series exploring the impact and actions taken by businesses to survive the past few years of economic downturn and the potential opportunities and lessons learned that may assist your business in the future.

The business and economic hardships most businesses have endured over the last 2 years has caused many businesses to fail as well as significantly retrench. While this deep and lengthy recession is still affecting many businesses there are signs that perhaps the worst is over.  In this part one of this blog series I will address the dynamic of client relations, loyalty and value perception to gain a better understanding on how to craft a future strategy to be for successful in the future.

During this deep recession many businesses lost clients. As business owners we can say these clients were lost as a result of overall decline in business activity. However, while there is some truth to this premise, in most cases we should examine the loss of clients using loyalty, value and pricing as a criteria.  In all cases the loss of a client occurred as a specific thought process by our client.  There was an active analysis performed by our client that determined that our services and/or products were not necessary to its survival.

In performing this analysis, the client may have determined that the services and/or products we provided could be obtained at lower prices or our competitors offered the services and/or products at a lower price.  Additionally, the client may have decided to sever its relationship with our companies as a result of a lack of loyalty or the perception of insufficient value.

Price, loyalty and value are in the eye of the beholder.  We may think that we have established an excellent and recurring business relationship with our clients and are providing a service and/or product with perceived value at a fair price. The reality, however, is that in many cases we assumed rather than developed and nurtured the loyalty and value we perceived.

In fact, many of the clients lost during the past few years could have been salvaged if we had actively been engaged in understanding the value proposition of our clients.   In the next installment of the blog we will examine this important element necessary to gain and nuture long-term successful client relationship.

Written by: Michael Janicki

www.janconsultinggroup.com

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The Small Business Jobs Act of 2010: will it help Small businesses in 2010 and beyond?

 This blog is the Third of a five part series commenting on the practical value, if any, of this legislation enacted on September 27th, 2010.

The Fourth Provision of note relates to boosting the current deduction for so called “startup Expenses”.  Beginning in the year 2010, the tax legislation increases the amount of deductible start-up expenses from $5,000 to $10,000. While this amount is relatively modest, it does provide a new business venture an additional $5,000 of current deduction which will provide some immediate additional cash flow which is generally desperately needed by new ventures.  This would be beneficial in the year you start your business and are able to deduct these amounts from income earned in the same year.

The Fifth provision of note involves the removal of cell phones and other similar telecommunications equipment from being classified as “listed Property”.  This is an important distinction since costs for “listed properties” cannot be deducted without the use of this property being substantiated by detailed evidence and records.  Before this change for the employer to qualify for the business deduction and employees to avoid income on all of the cell phones and other mobile communications equipment treated as “listed property”, employees technically were required to track each outgoing and incoming call as business or personal.  This was obviously not practical, and few companies had a policy to satisfy those requirements.

Written By: Michael Janicki

www.janconsultinggroup.com

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Who has the greater challenges? The CEO of a Global 1000 company or the owner of his own business? Part 2 of 4

This four part Blog will examine the organizational, operational, competitive pressures, management influences, governance and external pressures faced by a typical CEO of a global 1000 company and the owner of a private small to mid-sized company.

In part 2 of this four part blog we will examine the operational and competitive pressures faced   by each. 

The CEO of a global 1000 company oversees a company with a well established operational structure that in all likelihood involves numerous subsidiaries, division and multi-national locations.  The products and services offered were probably offered prior to the CEO either joining the company or being promoted to the position. The vast array of products and services makes it virtually impossible for the CEO to manage or understand the day to day operational processes necessary to produce and sell these products and services. However, the CEO is responsible for directing the company to achieve increasing profitable results, enhancing the brand recognition of its products and services and the cultivation of a winning competitive culture within the Company. The prior and future performance of the company is tied to the acceptance of its products and services offered by the company by the marketplace.  The CEO as the leader of the company has the responsibility to lead the company toward increasing market share and to determine when certain products and services are no longer profitable and should be abandoned. The CEO executes his or her responsibility for profitable growth and competitive advantage thru a strategic process with the senior management of the company.  The CEO relies on sophisticated reports, financial dashboards and a complex strategic planning process to make decision affecting the future growth of the company.

The owner of his own business does not commence operations with any established track record. Every product and service needs to be developed and processes established in order to create a product or service that is marketable. The product and services offered require a hand-on approach by the owner.  The operational aspects of building a business will consume most of the owners time in the early stages of building the business to reach a level of stable profitability.  The advantage the owner has in starting the operational process is to gain a unique understanding of the product development and to fine-tune the process in the most efficient manner without overcoming years of established processes and/or legacy systems that cripple the larger established companies.

The competitive pressure faced by business owners comes from a wide range of areas.

On the positive side as a new company there are no performance expectations as a CEO would have from Wall Street analysts, shareholders, board of directors, etc.

The competitive challenges, however, are numerous including:

  • Lack of branding
  • Little or no track record with product or service
  • Limited resources for large volume products
  • Inability to service large regional and national contracts

 

When you analyze the most successful business owners and CEO’s , they each understand the challenges they are facing and embrace the opportunity to turn these challenges into opportunities to lead and grow successful enterprises.

Written By Michael Janicki

www.janconsultinggroup.com

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The use of “leverage” to grow an entrepreneurial Firm. Part 1 of 3

  

Business Definition:

Leverage is defined as the ability to influence or impact a process, or an environment, in a way that multiples the outcome of one’s efforts without a corresponding increase in the consumption of resources. In other words, Leverage is advantageous conditions of having a relatively smaller, highly efficient amount of effort achieve a relatively high level of returns. Thus” doing a lot with a little”

In the next three Blogs I will explore the use of business “leverage” in the functional areas of an entrepreneurial business to enhance the ability of the company to achieve sustainable growth and profitability.

Let’s begin with the business owner and his or her management style.  At the inception of any business the business owner will be required to wear multiple hats and micro- manage most, if not all, of the functions of the business. This is a necessity rather than a management style due to lack of resources as well as establishing a culture for the future operation of the business. Beyond this initial startup phase as the business begins to have additional financial and human resources, the business owner will have an opportunity to begin to employ management leverage.

A business owner who articulates responsibility and accountability among his or her employees

by properly training and supervising those without micro-managing will begin to empower their workforce and create an environment of empowerment, initiative and reliability.  This culture is necessary to be maintained and reinforced in order to successfully manage a growing business.

The successful implementation of this strategy will create the future managers and supervisors for the company who will train future employees. In addition, it will allow the business owner to spend an increasing amount of time over viewing the operations rather than micro-managing each aspect of operations and devote the increased time to strategically growing the company.  

Written By: Michael Janicki

www.janconsultinggroup.com

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