As many of my customers have remarked to me, often with some surprise, they are managing to achieve more now than they were before the pandemic, and usually at a lower cost and with fewer people. So why are SMEs experiencing this now?
This should not come as a surprise – systems and processes that are not routinely tested and evaluated tend to become inefficient over time. People in the corporate world of big business understand this phenomenon very well and they have at their disposal a range of tools and techniques to force changes on the organisation and drive out poor productivity and low efficiency.
In the world of small business, particularly small owner managed businesses, the problem may be recognised but the tools and techniques used in the corporate world are seldom applicable. So, very commonly in small businesses, things inevitably follow the expected pattern and productivity declines almost unnoticed over time. Then along comes a pandemic and all at once survival becomes everyone’s top priority.
The story of the last six months
In most businesses, a root and branch review of the way everything gets done became an urgent priority the moment the first lock down was announced. Nothing has been immune from scrutiny and all the tasks we had been happily performing as a matter of routine for years, have now been re-examined with much more critical eyes – resulting in changes that were both necessary and probably overdue.
Things should not be allowed to stop there. Smart companies see recession as a chance to address issues they may just not have had the time to fix in busier and happier times.
So, what are the 5 key areas of change during a recession?
Top of my list has to be an overhaul of the technology platform. Right now, much more business is being done in ways that are critically dependent on the IT infrastructure – right across the business. So having secure, stable IT solutions is no longer a “nice to have” option but a “must have” imperative.
It may be counter-intuitive but recession is the best time to review core applications and move tasks and processes to IT solutions wherever possible across the business. Making sure that all the key systems the company uses are fully and properly integrated is a “game changer”. Almost all small businesses could significantly reduce transaction costs, reduce errors and waste, improve quality and raise customer satisfaction levels by making better and more complete use of IT.
Cash flow forecast
For the owners and managers of the business, one of the most valuable outputs from all these systems should be an up-to-date cash flow forecast. All the other key metrics in the monthly management accounts pack are good to have as well . . . but without cash there is no business.
Clear, up-to-date visibility of the sales funnel and key marketing metrics
Most small businesses do not have good forward visibility of their sales pipeline or sensible measurement of their marketing processes – and these are particularly important in volatile markets. These parts of the operation are some of the easiest things to measure and yet the work is just not done. Simple stuff like knowing how many new inquiries have been received each month and having access to a full, up-to-date list of all the prospects to whom the company is talking, knowing what the next action will be, by what date and who will complete it. Today there is just no reason for any company not to have accurate and timely measurement and reporting of these vital functions.
Implementing or improving upon some kind of routine customer satisfaction process for the business is another often over-looked but equally important initiative that is more easily implemented when people in the business are not rushed off their feet. In the current market many things have changed and so have customer behaviours and priorities so it is more important than ever to understand what customers value and leads to satisfaction.
Like a lot of stuff that needs to be done in a small business it can be very difficult for the owner to achieve sufficient “distance” from the operation to be objective about the need for, and the nature of, changes in these five areas that would deliver long term benefits for the organisation. A fresh pair of eyes really can see more clearly and this is one of the key areas where a relationship with a trusted business advisor will add considerable and lasting value to your business.