I had an interesting conversation with a business owner this morning. We were lamenting the down turn in the stock market, the pending recession and what it has done to our retirement accounts and businesses. This owner had lost a major client and other projects got reduced in scope. Interestingly though, he was quick to point out the silver lining in this current slow down.
With some extra time on his hands he has been taking a close look at his operation. Using a fine toothcomb he as looked at each department and found no less than ten areas that need improvement.
One of his employees, a close friend, is really not performing at a level that matches his compensation, so he’s going to have to deliver some tough news which will likely be a layoff.
He has also realized that he has not been out with many of his customers face-to-face in quite some time. So, he’s packing his bags and is planning to travel some to shore up these relationships. Another sales area discovery is that they have not been up selling effectively, so he’s building in some new incentives in the sales compensation plan to motivate better sales behavior.
The biggest change he is making from the cost side is to realign how he structures is business so it can grow and contract more easily. A number of his employees will be paid more, but are going on an independent contractor status. (The requirements for this change are stringent, so consult an attorney before making that move.) This will allow these employees to fill in their time with work from other companies and reduce expenses for the company during seasonal down turns, which are common with this company.
It is the fall of 2008 and times are tough for a lot of businesses, but the smart owners are using this as a time to rebuild and be prepared as the economy turns up again. This owner is a case in point. He is enthusiastic about what his company will look like after this overhaul. “This is good for me,” he said, “I’m going to have an even better company in six months.”