Tag Archives: Slow

How Do You Adjust to Tight Cash Situations? Eight Options

Situation: A company is faced with a tight cash situation. A combination of increased interest rates, a business slowdown, and slow deliveries from suppliers have contributed to this. The CEO needs to find ways to stretch available cash, or to rely on other alternatives to assure that commitments are delivered to clients. How do you adjust to tight cash situations?

Advice from the CEOs:

  • One company actively and consistently uses their bank line of credit to cover end of quarter payables. They pay this down promptly as cash comes in.
  • Profit sharing represents 20 -25% of another company’s total compensation. When profits are down this gives them some cushion because payouts are lower.
  • One company maintains frequent and open communication with their vendors. This makes it easier to get them to work with the company when cash is tight.
  • Another company has vastly increased sales activity. This has helped to improve the business pipeline, and this in turn improves the story that they can tell their bank and vendors. It helps to reassure them that they are a good partner and a good credit risk when cash is tight.
  • It’s a good idea to maintain regular contact with the company’s best funnel clients – the ones who bring in new business. As a result if their competitors are struggling then they get a shot at their business.
  • It is better to cut select people than to put a large number of people on extended reduced time. Hard as it is to let people go, this is better for morale.
  • For less skilled operations work, one company used to use temp workers. When they’ve discussed the need to cut back with permanent employees and asked about this work, they were told that they could cover this work in their available time. The team really pulled together and were grateful for the opportunity to remain full-time.
  • Another company continues to model their pipeline, and plans for adjustments in customer demand. This enables them to act sooner rather than later when adjustments are needed.

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What are the Pros & Cons of In-House Software Development? Three Points

Situation: A company used internal resources for a small in-house project – developing web-based time sheets. They had obtained bids for external development but found that internal resources could do the same time for about half of what external development would cost. The trade-off was slow delivery. What are the pros & cons of in-house software development?

Advice from the CEOs:

  • Why was delivery slow?
    • When faced with a choice in priority between the internal development task vs. responding to the needs of external customers, internal delivery was pushed back in time.
  • This is exactly what others have experienced when faced with the choice between internal and external software development. Look at the trade-off, not just in terms of “cost” quoted by internal developers, but also in terms of opportunity cost. The real cost is what these resources could have provided had the same time been spent to support external revenue-producing projects.
  • Just as the company did in the first place, get external bids. If the use of internal resources is an option, compare time to delivery forecasted using internal resources plus any other internal costs. Then analyze the opportunity cost of not dedicating these resources to revenue-producing activity. The sum of these costs should then be compared with external bids. Adding opportunity cost to the analysis can make a big difference.
  • Once the company has this information, make a business decision as to the best choice. Keep in mind that unless the priorities of the internal group doing the development work are changed, they may not respond to the needs of the internal project on a timely basis. It will be the CEO’s call as to whether the developers prioritize their time to support external projects or the internal project.

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Where Should You Focus for the Next Year? Three Points

Situation: A CEO has had to shift half of the company’s employees to part-time due to reduced business. This has hampered new product development. The situation has been exacerbated by slow payments from customers. Where should you focus for the next year?

Advice from the CEOs:

  • The company has a lot going on. Validate the company’s market potential for products in development, and start gearing up the marketing program so that it will impact this and next year’s sales.
    • Get a feel for how many customers want the new products in development. Invest in some market research to validate this.
    • The bottom line is that product development only pays if the company can sell a lot more product! The team needs to know whether customers for the new products exist, in what numbers, where and who they are, and their most critical needs. Without this market intelligence, the company is in no position to tell whether there is a market, nor is the company prepared to address it.
    • Assume that there is a market, that it can be quantified. Once the company knows who and where the customers are and knows their most critical needs, the next step is to prepare to attack this market. This is not something that is done in 1-2 months, after the product is ready to sell. The company needs to be starting now if marketing is to be initiated in 6-8 months.
  • Past practice has been to split R&D costs with the customer. The company has the expertise, the customer the money – this is close enough to 50/50. There is no need to show them the numbers. R&D should not be funded through future sales but should be making money now.
  • One project has been taking so much attention that it is hobbling the company. The company is so focused on getting this “just right” for the customer that sales and market development have been neglected.
    • For the next 3 months, focus on completing this project, getting it out the door, and getting the company’s focus back on growth. A sense of urgency is needed!

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How Do You Create Clarity About the Future? A Simple Method

Situation: A company finds that new opportunities are coming in more slowly than they had planned. They have work now, but no confidence that this will continue long term. This is frustrating because they are in the middle of a transition in their business model. How do you create clarity about the future?

Advice from the CEOs:

  • There is a lot of uncertainty in the business world. Low oil prices are depressing investment in the energy sector. Global political and economic uncertainty are not conducive to bold expansion plans. This uncertainty may last for some time. Companies have to adapt.
  • A mapping solution is a used by some companies use to create clarity between alternatives:
    • Start with box representing where you are now.
    • Draw boxes representing each of the alternatives that you are considering.
    • Map the paths that will get from where you are now to each alternative. Draw them out, including what you have to accomplish and what resources you have or must acquire to get to each.
    • Do a SWOT analysis (strengths, weaknesses, opportunities, threats) for each alternative.
    • This will help you to think through each of the options and identify the benefits and pitfalls of each.
    • This is a great exercise to do with your management team, as others will add their own perspective and insights.
  • Tools: use Post-it notes – either easel pads or larger (5” x 8”) Post-it notes. Put these on the wall, and start sketching out your ideas with boxes and paths. Revisit the charts for at least a few minutes a day for the next 3-5 days. You will be amazed at both the number of new options you generate and how the obvious options rise to the top.
  • This is much easier and more productive than it may sound. Don’t fear the process.

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How Do You Set Expectations for an Employee? Six Suggestions

Situation: A company hired an employee one year ago. The employee is competent but slow. Even after a year on the job, other employees with similar skills and experience are able to complete the same job three times faster. What is the best way to handle this? How do you set expectations for an employee?

Advice from the CEOs:

  • The most important principle governing situations like this is clarity of communications. You must clearly express your expectations, and you must assure that the employee clearly understands your expectations.
  • Assure that expectations are clearly expressed. This means what you expect in terms of performance, and firm timelines for achieving minimum requirements. You also must assure that the employee understands the consequences for failing to meet minimum requirements. The best assurance is written confirmation that the employee understands what is expected.
  • Don’t be vague or nice about your expectations, performance requirements or the consequences for failing to meet minimum requirements. This risks sending the wrong message to the employee.
  • Put the employee on a performance improvement plan to meet minimum job requirements. Monitor and document for 30-60 days and then handle according to how the employee responds.
  • If the individual can’t meet the objective, but has potential value to the company, offer the person an appropriate position at the level that the new position pays.
  • Have a second person in the room when you deliver the message. If you determine that you have to terminate the employee and the employee elects to sue, this will help your case in a judicial action.

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