Talking more about creating your company’s own Economic Stimulus Plan we can agree that the primary objectives are to simultaneously:
- Generate More Cash Today
- Generate More Cash Tomorrow
In today’s economic climate of uncertainty, Cash is King (and I don’t mean Johnny Cash, although he is the king). So, let’s talk about actions you can take that will generate more cash today.
Consider these six questions that I discussed last week:
- Can you identify the best customers to sell to now and in the future?
- Do you know what kinds of products and services they want?
- Can you compare your products to your competitors’ products in terms of price, delivery, key features, and model by model? Can you do the same for the industries and markets you serve?
- Do you know the specific reasons you are losing orders to competitors for every known lost order in the last year?
- Do you know if you are making adequate margins on each product line, model and job?
- Do you know your next market and the opportunities and challenges it represents for your company?
Based on your experiences, which questions do you think are the most important ones to answer to generate more free cash today? I’d be interested to read your thoughts, so please post a comment to this column.
My viewpoint is that the following questions in order are the most important ones to address to begin to free up more cash immediately. I’ve also included my comments on each question, why it’s important and what you can do today to make progress:
Do you know if you are making adequate margins on each product line, model and job?
Comment: If you don’t know if you are making or losing money on each job, how can you identify ways to improve profitability? You also are quoting blindly without knowing if you’ll make money on a particular job and you don’t know if each customer is profitable. Developing a Generate Cash Today strategy is based on knowing WHERE to focus your energies.
Can you identify the best customers to sell to now and in the future?
Comment: Once you know which customers are your most profitable, you can profile them and begin to find more customers like them – which should be the basis for your Cash Today Sales Plan. Read my past columns for more on the process of profiling your customer list and finding Most Valuable Customers.
Do you know the specific reasons you are losing orders to competitors for every known lost order in the last year?
Comment: One of the best ways to generate immediate sales is to review your Lost Order list and call the customers to find out why you actually lost the order. I’ve seen the ratio to new sales coming from a Lost Order Analysis as high as 25%. You’ll find out all sorts of useful things to help you improve: like how to quote better, increase your Hit Rate and communicate better with your customers. You’ll also typically find opportunities to Re-Quote due to changes outside your control like, dissatisfaction with a competitor, no award or changes in the contract specs.
Follow some of these simple suggestions and you will begin to make traction with Generating More Cash Today.
Charlie Alter owns Bentbrook Advisors LLC based in Sylvania, OH – he specializes in Growth Strategy Consulting & Executive Coaching, Charlie can be reached at firstname.lastname@example.org