Small to Medium Sized Enterprises Close 2013 and Plan for 2014

Talk to anyone and they will say that 2013 has been a challenge so far and is expected to be for the balance of the year. So, will 2014 be any different? The issues of business are fairly constant. Some examples are: customer acquisition and retention, cost pressures, limited resources (both financial and people), and government regulations. We will face these challenges in 2014 but with the added emphasis in the United States on taxes and healthcare. It is important that you plan now for a successful 2014. Customer Acquisition and Retention My clients tell me that the "secret" to this challenge is the timely delivery of quality products and services at a reasonable price. It sounds easy but we have all seen failures each day. I have found the best way to test performance is to get the "voice of the customer" on a regular basis. Many times, companies go along without really talking to their customers – and then one day the customer stops buying. It is easier to fix a problem early on rather than waiting until the customer takes action and then trying to fix it. If you do not have a program in place to get the customer feedback, than I suggest you start one. If you do have a program in place, review it to make sure you are getting "good" information. Many companies want to survey their customers directly but unless you have qualified people on staff to get "the voice of the customer", I suggest you consider outsourcing that function. Also, don’t forget the "voice of the employees". They, too, have valuable input as to how things are really going. Cost Pressures In many cases, the two biggest expense categories are the people costs and the procurement costs (direct and indirect). Each has its unique challenges but they both must be managed aggressively. People Costs As I have noted in previous articles, people costs can be improved by three approaches: Improving and standardizing your processes Creating a shared services center Outsourcing the processes All of these options, if done properly, will improve your performance and reduce your costs. If you have not looked at these options before, I suggest you consider them in your planning for 2014. Procurement Costs When is the last time you changed a supplier? Are your procurement contracts on the supplier paper? Do you accept price increases as an "industry standard"? These are only a few of the danger signs that you may not be getting the best price and/or quality from your suppliers. You need people who are procurement professionals and not just people who place orders. If you don’t have a procurement professional who can develop and implement a strategic plan to ensure you are getting the best price and quality, then consider hiring one. A clear alternative is to outsource your procurement function. With a good service agreement in place this may be your best approach to controlling this cost area. If you have multiple procurement groups in your company, consider consolidating them for more efficiency and cost savings. Limited Resources The two components that I noted above in this area are financial resources and people resources. Financial Resources The supply of available money will depend on how big of a "Small- to Medium-sized Enterprise(SME) you are; on your financials; and on what countries you operate in. The one thing that we have been focusing on in this article is improving your financials. Bringing in more revenue by truly delivering for your customer will enhance your reputation and improve your revenue stream. In addition, by controlling your cost you will take more of that revenue to the bottom line. With more money on the bottom line, you have more financial resource to work with and will stand a better chance of landing funding if you need that resource. People Resources I’m sure you’ll agree that people are the key to your success, unless you are 100% automated. The challenge is to have the right number of people, with the right skill set, at the right time. The right number of people – One solution is to launch a process improvement and / or shared services project that will cut out dead wood and improve your productivity. That will get you to the optimum number of people needed for your company. Also, remember that doing some processes internally may not be the best use of your people resources, which is where outsourcing comes into play. [Editor’s note: see my recent blog on workforce optimization.) The right skill set – This will depend upon availability in the market, employee retention, and the training you provide (Editor’s note: make sure you know which skill sets you need). It is true that certain skill sets are in short supply now and will be in 2014. Alternative sources for these skills may be found in outsourcing, crowdsourcing, and opening operations in a better labor market. The right time – Timing will depend upon your ability to forecast, hire, and train to your needs. Some companies have a core group of employees and use temporary staffing, staff augmentation, or outsourcing to flex their ranks. Government Regulations A recent World Bank[1] study shows that the top 10 most business-friendly countries are: Singapore, Hong Kong, New Zealand, United States, Denmark, Norway, United Kingdom, South Korea, Georgia, and Australia, in that order. Taxes However, the top 10 countries for the lowest taxes are: United Arab Emirates, Qatar, Saudi Arabia, Hong Kong, Singapore, Ireland, Bahrain, Canada, Kiribati, and Oman. As an SME, your tax strategies will vary according to your operating location and the advice from your tax professionals. Health Care The reason I am including this in my column is that in the United States health care has an impact on SMEs. Developing a strategy is very difficult because of the lack of information and the changing information around the new Affordable Health Care Act. Obviously, reducing staff through improved productivity is helpful, but your number of employees may still be over the threshold. You may consider outsourcing to reduce headcount but remember that, depending upon where the outsourcer is located, they may have the same health care issues you do. In summary, plan now for 2014 and develop strategies to address your challenges. References: [1] World Bank 2013 "10 Friendliness Countries for Business" [inlinead]

Small to Medium Sized Enterprises Close 2013 and Plan for 2014

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