5 Financial Pressure Points For CEOs To Evaluate During COVID Times
Quite frankly, this may be the most difficult period in the history of your company. You are navigating through a storm you never imagined, with potentially the worst still to come. Or perhaps the worst is behind us.
We just don’t know. And with all of the uncertainty posed by COVID-19, it requires great leadership to reassess, rethink, re-envision and empower our teams to thrive during this unprecedented time. The questions are: Can your company survive? How do you work through this? How do you come out of this a stronger, better company?
Depending on the industry, businesses have different pressure points. But there are some core fundamentals that have to take place in every single business to achieve success. It comes down to three components: the quality of the work that you do; the quantity of people with whom you share your message and sell your product to; and the perception of you as the leader and of your company. The more that you invest in those three areas, the more successful the firm will be.
But succeeding in those areas requires dealing with and and solving the pressure points that apply to most businesses. There are five I think are the most important to focus on during our country’s great economic challenges. What they have in common is we have some control over each of them:
- Gross sales. Whatever your business is, for it to exist, you have to sell your product, sell it frequently, sell it ongoing, and make it easy for customers to want more and more of your product.
When you look at what drives gross sales, it’s important to analyze the components that lead to sales. If your company makes subtle changes in the components, those can add up to big bottom-line profits. If you focus on those subtle yet vital things every single day, month and quarter, you drive success.
For some companies, an effective way to do this is designating what they consider to be key performance indicators that are in direct correlation with the sales components. Figure out how to drive those KPIs. For example, if you decide to focus on 8% improvement in those areas per quarter, you’re going to have success. It can’t be done every single quarter, but it can be done on an ongoing basis.
During this crisis, what I’m hearing while talking to many business people is how the communication factor and bringing added value to customers are the big differentiators in driving gross sales. For some companies, the differentiator is cost. But let’s say you’re a company competing with another that is focused solely on cost factors. The feedback I’m getting is if your business wraps a service around that product, you win the customer’s business. It’s the communication, the actual talking, that is selling more and allowing people to generate higher gross margins.
This process allows you to increase your pricing. That additional product line is important to the future of your business in these uncertain times. So from a sales perspective, you want to look at this as a unique opportunity. The new business you might normally get from traveling and attending trade shows and industry events isn’t there and might not be for a while due to COVID. So it’s even more critical to get repeat business and inspire increased loyalty among your current customer base. And the more quickly you can respond with better service, with something extra, the more likely you are to keep that client and get that repeat business. This comes down to educating your people and making sure that your sales team is fully empowered to evaluate ways to add value.
- Costs of goods sold. Right now could be a great opportunity for you to benefit from getting a substantially greater discount, such as volume discounts, on the costs of goods from your supplier. You can also renegotiate better payment terms or longer payment terms. Also look at eliminating some of your product line; really look at the profit margin and eliminating the low-profit margin things that you’re selling. A lot of times, these items necessitate a lot of customer service, add expense, and create a time drain – energy that is not leading to referrals or to repeat business.
I think this is also a good time to reevaluate your suppliers and your strategic partners. When you’re analyzing the cost of goods sold, look hard at the suppliers’ ability to deliver in a timely manner. This becomes more and more important as we move forward.
- Salaries and wages. At this point in time, there are a tremendous amount of great people available for your organization. You can hire completely new people to take you to the next level.
So when you look at your company’s salaries, are you getting the most productivity from those people? Should you move people into different job functions?
With most people working from home, it’s imperative as the leader that you have ways to monitor your team and see who’s really working hard. You can see who’s logging into your mainframes and your servers. You can see what the email levels are. And if you use a customer relationship management system, you can see how many notes are being taken. You can see the sales that are being taken, who’s productive, and who’s not.
Unfortunately, for some people, this may not be a good outcome. But if you’re not efficient and you’re not productive, there are 10 other people out there who could do your job better, faster, and quicker. And they want to do it. This is a time for the CEO to prepare the managers to make good decisions about their people. Remember, there are a lot of talented people out there. We’re seeing companies laying off some unbelievable people. And we’re seeing other companies in the same space hire those people.
Employees you have who are complaining are not adding value and are not team players. This is a time where the team basically has to be looking at all hands on deck. Everybody needs to be reaching out to all of your clients. Everybody working at your company needs to be skilled and engaged enough to understand the unique circumstances of what clients/customers are going through, and asking how they can help them navigate through this.
- Advertising and marketing expenses. Your target market is going to come back and buy more of what you have to offer. And this is the time, through advertising and all different types of marketing, to get repeat business. This is a time to get referrals. This is a time to take your competitors’ clients, because they’re not servicing them the right way.
Advertising and marketing are going to allow those people to know you exist. Many businesses are kind of hidden. A small niche business could become a much bigger business by simply getting that message out there. Advertising is tricky, with a lot of opinions and biases on how to advertise properly, market companies and attract people. But basically, through social media particularly, the opportunity is there to keep and attract raving fans.
When we emerge into the new normal, there will be a new set of players and people who are winning the game. The question is, will my target audience know that I exist? And that my product exists?
- Capital expenditures, mainly technology. It’s not just technology that creates a great outcome. It’s the right people with the right technology.
One of the things we did recently was embrace an electronic scheduling system that connected our availability for the types of meetings, such as those via video, that we wanted to create. My previous old-school method for scheduling a meeting was to make a phone call and get you on the calendar. We would decide, for example, that it’s going to be a web-based meeting. I would send the calendar invite out, put in the webinar information, send it to you separately, and make sure that you have it. The new process integrates all of that, and all of those things are automatically put onto the calendar.
The client receives an email with all the proper links to the meeting services and the phone numbers, and those reminders that go out. And all of a sudden you have a 30 to 40% increase in the amount of meetings that you can do during the week. But the person at our company who was spending all that time and energy now is freed up to do other things and make an impact somewhere else in the business. The elimination of menial tasks through technology increases productivity and efficiency throughout the organization. It’s not that it eliminates that person. It frees that person to be more successful.
From a new mindset perspective, we have to move from merely surviving to asking the hard question: How do we thrive in COVID times and beyond? We have to rethink how we run our companies and how we can empower our teams to be more productive. We have to allow our clients to know that we’re here for them and when they need us most.
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