Tag Archives: Contracts

How Do You Manage Seasonal Gaps in Project Flow? Five Options

Situation: A company experiences seasonal gaps in project flow. This makes it difficult to project both cash flow and staffing needs into the future. In addition, monthly cash flow tends to be uneven. What can they do to improve control of internal and external resources in this environment? How do you manage seasonal gaps in project flow?

Advice from the CEOs:

  • The company currently focuses 60% on consulting and 40% on internal projects, some of which produce future projects. Relative proportions shift over time, and projects can be cancelled.
  • Try to write the company’s contracts to push revenue to early stages of a project, so that there is more cash cushion to help ride out short cash periods.
  • Look for options to change the business model to increase financial flexibility.
    • If there are significant margin differentials between different types of projects this has overhead implications when resources are shifted.
    • Look for ways to allocate less expensive resources or virtual resources with a lower cost to lower margin projects. Look for opportunities to utilize remote resources if these resources cost less.
  • Adjust staff assignments to maximize payoff, as well as staff retention options. Look for project work opportunities.
  • Analyze and evaluate the ability to switch personnel between paying projects and internal development projects.

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How Do You Fund Growth Strategically? Five Approaches

Situation: A CEO is looking at a significant investment in capital equipment. Being considered are not just the cost of the investment, but the opportunity cost of not making the investment and the impact that this will have on the business. An additional consideration is the business mix of the company and whether to shift focus from low volume/high margin to low margin/high volume products. What tools have others used to assess these trade-offs? How do you fund growth strategically?

Advice from the CEOs:

  • Review the company’s approach to contracts. It may be desirable to revise the approach in light of the new objective. The switch from low volume/high margin to low margin/high volume products impacts not only production but also marketing, sales, finance and accounting.
  • Price some early new contracts below market to finance the additional equipment expenditures, as well as to test market response to the new offering. This will help to identify additional adjustments that are needed for the new approach and offering to succeed.
  • Structure the financing options for equipment purchases creatively, for example by allowing for participation by customers and investors.
  • Watch changes in working capital at all times and keep it under control. Working capital is a commitment of resources just as is buying equipment or facilities.
  • Consider all resource commitments as investments, regardless of the way the accountants deal with them as in expensing vs. capitalizing these investments on the balance sheet. For example, a marketing program is an investment even though it will show up as an operating expense. Make sure that this can be justified in terms of future cash flows expected.

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How Do You Maintain Focus on Quarterly Objectives? Three Ideas

Situation: The CEO of a service company is focused on growth, which is driven by new contracts. This, in turn is driven by new sales contacts per week. Sales staff are paid on commission. The CEO wants to assure that quarterly objectives are met to grow the company. How do you maintain focus on quarterly objectives?

Advice from the CEOs:

  • Track and publish progress against weekly, monthly, quarterly metric objectives and key drivers.
    • Post charts around the office to maintain staff focus on objectives.
    • Put up whiteboards that show individual metrics as well as daily “top 3” focus items.
  • Identify key market sectors where focus will pay off for the company.
    • It’s OK to take a generalist approach as the company develops a new market sector. This helps to learn the dynamics of that sector.
    • As sector market penetration grows, develop functional or sector specialties.
  • Identify and focus on the gaps to company success.
    • Monitor and generate incentives to increase sales activity. The more fun that is involved in this, the faster the company will close the gaps.
    • Focus marketing on developing more prospects. Brainstorm creative marketing approaches that will generate prospects. Create a competition to develop the best new ideas with incentives or prizes to celebrate the most successful ideas.
    • If additional resources are required, currently beyond the company’s budget, investigate adding commission-driven contract resources with strong incentives for identifying new prospects and landing new clients.

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