2009 04 02 Surviving Recession- V02

A Practical Approach

March 2009

Contents 3 ............................................... Are you worried about making it through the economic downturn? 5 .................................................................................................................. 1. Sales and Profit Growth 7 ........................................................................................................................ 2. Market Proposion 9 ..................................................................................................................... 3. Management Quality 10 ....................................................................................................................... 4. Employees’ Loyalty 11 ....................................................................................................................... 5. Client Relaonship 12 ........................................................................................................................ 6. Quality of Income 13 ..................................................................................................................... 7. Intellectual Property 15 ...................................................................................................................... How we may help you

Surviving Recession: A Praccal Approach

Are you worried about making it through the economic downturn? It›s not a question anymore whether we are in recession. Yes, We are !! So the question now is how to come out of it… with little bleeding. Our research and experience shows that standing still & doing what you

for what they don’t know. What they will regret is not taking steps to

So, if change is at a premium, how do you jump start it during a period where most managers just want to put their heads down and “get through this” ?

discovering the vast range of new and exciting opportunities open to all. Most companies who gain ground during recessions keep it later, and most who lose ground do not regain it later. More

have always done will hurt businesses in the long run.

Change is the critical element to surviving a recession.

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Recession creates opportunities for business managers to look at their business differently, to make tough decisions that probably always needed to happen. There is now no room for complacency and for doing what you always did. It’s time to shake off the worry and take a hard look at your business. Studies have shown that recessions are the best time to step up your competitiveness. Companies have twice the opportunity to change their relative position in an industry during a recession compared to growth times.

Start the process now. If you wait until you see actual volume declines in your sales reports, the recession will have already begun, and you will be under enormous pressure to act immediately. No one thinks as clearly when he/ she is already in crisis. So start now, while you have time to look beyond the obvious.

What is working for your business today? Where is your business leaking cash? From products and services to staff, this is not a time for a free ride. A business manager needs to think creatively about how and what they can do to make the recession an opportunity rather than a place to slowly fade.

creativity, not less, can determine which category you fall into!!

Where do you start ? First of all you need to have a target, a road map and the right tools to get you there. Without them you will be searching for a needle in the hay. Don’t rely on old practices to get you out of the mud. What worked for you before will not help you now, as the rules of the game have changed. To help you get started, we have identified 7 pillars that would resist recession and even help services companies grow. They are the

7 ROX of Growth. This model will help you discover the possibilities as we know we have the answers you’re looking for…

Any business owner can be forgiven

Start now, while you have me to look beyond the obvious.

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Are you worried about making it

Intellectual Property

Quality of Income

Client Relationship

Employees’ Loyalty

Management Quality

Market Proposition

Sales and Profit Growth

through the economic downturn?

Any business owner can be forgiven for what they don’t know-What they will regret is not taking acon!

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Surviving Recession: A Praccal Approach

1. Sales and Profit Growth What’s your plan for increased sales? Most business doesn’t have one or the plan is loosely “…we just need more sales!” Two things could make the difference between survival and bankruptcy:

the economic backdrop each industry

working hand-in-hand to maximize your

sector is operating within.

investments in programs that make the most sense - like intimate gatherings

Increase Sales Performance...

with active follow-up vs. broadcast marketing activities.

You need to measure sales performance and measure it fast! Measure sales by market sector,

1-How we attract clients to us

If you are a larger firm with multiple

(marketing), and 2-How we persuade them to do business with us (sales).

practices and global reach, continuing to develop great intellectual capital, disseminating it smartly and ensuring that you continue to build brand recognition, remain strategic. Reallocate your marketing and business development activities to match both the industry sectors that are doing the best during this recession and design the right messages given

You just need to take a hard look at the sales and marketing activities you are doing. If you are a small firm that generates most of its business through network-based activities, then make sure that your marketing and

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business development activities are

Measure sales indicators by different sectors and lines of services Measure your sales on a weekly basis and analyze recovery performance Sales

Increase Cost Examine overhead costs and reduce costs that are not sales Reduction related Costs related to Marketing & Sales should remain intact

service line, client, project, sales, persons and team. Measure it weekly and put charts in key places in your office. Run sales and resource meetings on a weekly basis and make sure that every opportunity is taken and all available staff are billing, recognize and reward performance. See how sales will grow!!!!

Analyze previous financial statements

Profit Growth Price Adjustment

Extract ratios to benchmark against market trend and competition

Recession does not mean you cannot increase your rates

Compare your prices to the market, and increase them if you are under-selling

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1. Sales and Profit Growth Push Your Profit to 20%... Without profit you will run out of cash quickly. Analyze the last 2 years profit and loss statement in detail and identify profits.

and 20% for profit and a margin for error in times of trouble.

Increase Your Rates... Cut Down Overhead Costs... What do you think is easier to do? ...

20% provides a cushion that will protect you against unexpected sales losses in a recession.

Get Your Gross Margins to Over 50%... Measure your Gross Margin... It should not be below 50%. You can afford to drop up to 10% in underutilized staff, leaving 20% for overheads

You want to grow profit and cash flow? It’s time for a price hike. Think you can’t

What’s its level and trend? Is it greater than 20% - the industry benchmark? Identify the levers that would increase it to 20% like fee rates, utilization, salaries, associate costs, and overheads. Measure them monthly as a team and aim to get to 20% as fast as possible.

order to maintain or improve profits.

reduce your expenses by 5% or double your sales? Most would agree that reducing expenses might be easier. Why then do most business owners spend little time on attempting to reduce expenses? Consider this: Your current profit margin is 5% - if you reduce cost by 5% your profits double! Of course, you can do the same thing by merely DOUBLING your sales! Right. Examine your overhead costs for the past 2 years and critically challenge them. Focus on costs like offices, expenses, administration that don’t grow sales. DON’T CUT sales and marketing costs – you will need these to keep growing or maintaining sales. Develop a plan to reduce the rest in

raise your rates while the economy is in a recession? Well, think again. First, you should know where your company stands compared to the market. If you are under-selling your services, increase your rates. If you get your services-value, don’t lower your rates… Even, target rate increases for new clients immediately.

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Surviving Recession: A Praccal Approach

2. Market Proposition Make your offer unique and don’t compete on price... • Where do your services fall in relation to the total market?

• Is this truly the position you want? • Are you “all things to all people”? • Should you move more toward a high-end position (charging a premium for a differentiated service)?

• Or toward a low-cost position (undercutting others’ prices but at a profit, due to high efficiency)? If you are truly “in the middle”, you should examine how well you’re doing regularly (with the help of a good accounting system). One of the most common areas which

can impact your business stability is the proposition; its presentation, how

firm can command market attention with greater ease than its competitors

you choose markets and the mix of

and the higher you can push up

channels used to take the proposition to those markets. A compelling and

your fees. If you’re in the ‘me too’ zone, then the risk of future profits is

unique value proposition (UVP) is the

higher because competition risks are

pivotal characteristic of a high growth professional services business. When

higher and you have to fight harder

you have this valuable asset, your sales can shoot through the roof. But if it’s absent, life can be tough while you compete for the attention of prospects with more choice than they can handle. Does your value proposition provoke a

strong uniquevalue proposition’ tend to have robust processes around such things as market research, competitor analysis and win/loss reviews.

‘WOW’ or a ‘so what’ effect? The more unique, compelling and targeted your value proposition is, the better you can demonstrate that your

for business. Quality firms with a

Notwithstanding your magnetism to the market, a clear value proposition helps you stand out in the crowd when a buyer is hunting for a company like yours!

7 Assess your business position in the market, and consequently your Unique Value Proposition you are offering to your clients

Command market attention by providing unique, compelling and targeted value proposition Push up your fees higher as a result

Develop measurement tools to identify your market trends and competitors’ efficiency which will allow you to distinguish your business

Uniqueness

WOW Effect

Explore new opportunities Identify your clients' needs and act quickly on them Research your clients perspectives, their worries in the market and offer them your help and advice

Opportunities

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2. Market Proposition Search for Untapped Areas... Do you really know what your clients’ needs are? Do some research and identify their needs; explore new venues and focus on what competitors are not paying attention to. Maybe your clients need to feel like they have made a difference in the world. They need to feel connected to others. What would it look like if you provided a service or product to your clients that removed a worry and made them feel better about themselves? Until someone else spots it, time to find the next spot...

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Surviving Recession: A Praccal Approach

3. Management Quality Seek Assistance and Be Open to Suggesons...

Be in Charge, Take Control... Not everybody on board should be

You may be forgiven for not possessing

involved in developing the company

the full skills needed to navigate in

strategy. This should be the task of the

these uncertain times. But you will not

leadership team of the company, and under your direction. Make this crystal

be forgiven for not seeking advice...

clear to all staff !! Get a resource person, a person from outside your company and who survived a recession. Share your worries with them and listen to their advice.

Hire a Finance Director...

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Do you have a finance director? If your answer is NO, go and hire a competent one. If your answer is YES, make sure he is doing what it takes...

Plan Ahead... As you’ll gather from the above, it’s important to revisit your business plan. During a recession, things get more sensitive. The revised business plan will also help you identify some other areas in need of immediate focus. If you do not have a business plan, there are strong grounds for doing

one now as changing environmental conditions are likely to result in more difficult times for everyone. A business plan can help you reassess key activities, focus minds (and indeed resources) and help you manage credit more prudently. Recessions have always been part of the economic cycle and are typically short-lived. It is not a time for rash decisions, but time for a brief pause to reassess ‘the current’ so the path to ‘the future’ can be planned with more certainty.

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4. Employees’ Loyalty There’s no point in winning all those

Best people would be the people who

new deals if you can’t provide the skills

are actually working on the process

and manpower to deliver, so you need

floor. This will reduce the fear factor,

an environment people want to work in, where they get recognition, reward,

boredom and idleness from your employees.

personal development and have fun. If you create this environment, then you’ll be more likely to hire the best people to keep your business growing and reduce their desire to leave! The best kind of loyalty is when both parties are benefiting. So, if you’ve locked your key staff into the future of your firm through profitsharing and share options, then you’ll have a team where all are focused on the equity growth of your firm and its future acquisition. Your people will help you survive. Now is the best time to use your best men. Form small teams using your people and start to collect ideas of improvement directly from your best people.

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Surviving Recession: A Praccal Approach

5. Client Relationship Do you have a well managed contact base and low client arion? The best opportunity to sell your services is to existing and past clients. We all know the enormous cost difference between maintaining existing clients and finding new ones. Identify your most desired current clients, past clients and prospects and plan a deliberate, high-quality and valueadded marketing and sales campaign. Consider hosting events that will keep your relationships active and fresh. And by all means call or e-mail them—or better yet, see them in person.

prepared to say something that will capture their interest.

So systemacally “walk the halls” of your clients (at no charge) to meet new people and uncover new opportunies. Besides calls and visits, conduct digital marketing via branded e-mail alerts and even banner advertising on industry or association web sites that your clients frequent. The next time you travel, be sure to contact as many clients and prospects as possible and line up meetings, lunches, dinners, etc. They will appreciate your checking in, and you just might uncover a great possibility. Remember that

11 Take the iniave and offer reduced or conngent fees for a fixed period and the work “Out of Sight, Out of Mind”. will most likely connue. The point is that your clients and prospects should be hearing from you on a regular basis and you should be

Visits

Calls

Emails

CLIENT

Digital Marketing

Reduced Offers

Events

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6. Quality of Income

no bad debt? If a good percentage

zero working capital requirement, then you have a very strong card to play with

of your future fee income is secured

investors!

Do you have long term contracts and

through long term contracts (12 months or more) with a number of clients, then you’re in the right place. Investors like to see a diverse client portfolio with fee income growth balanced across existing clients and new business. Add to that a quality approach to billing and debt collection, resulting in zero bad debt and low to

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Surviving Recession: A Praccal Approach

7. Intellectual Property (IP) Intellectual Property, such as patents, trademarks, copyrights, and trade secrets are not just intangible legal tools but strategic assets that create business worth in ways no other physical business assets can. IP can be a company’s most valuable asset. Simply put, IP is any creation of the mind. In franchising business, these are concepts, logos, brand name, product development procedures, and innovations.

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Failure to protect this IP could lead to theft of intangible assets and diminished revenues, resulting in weak position in the market. If fully utilized and protected, these IP assets can translate to fortune and success for your business, big or small.

So discover and protect your IP treasures today.

You CAN prosper in turbulent mes. Believe in yourself and your ability to keep your business healthy. This recession will end, and the winners will be out in front leading the way:

Be one of them!

www.roxmc.com

How We May Help you

Who We Are:

What We Do:

How We Do it:

We are a regional consulting firm with several offices across the Middle East and rapidly expanding. Our team is made up of career consultants with international experience and local relevance as well as international industry and subject-matter experts with proven track record, thus striking an optimum balance among creativity, discipline and practicality.

We help our clients to grow and become more successful by providing viable insights and realistic solutions to complex matters. We provide practical business solutions in several areas including but not limited to Growth, Corporate Strategies, Program Management, Family and Corporate Governance, Initial Public Offering (IPO), Executive Coaching, Human Resources and Human Performance.

We work on improving our clients’ organization and walk with them side by side throughout every step of the design and implementation ensuring al is moving in the right direction. We are a firm that delivers solid and measurable results in a pragmatic way. Hence, we at ROX say :

“Yes, we are praccal…”

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“Yes,

”

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Tel : +966 1 416 2532 Fax: +966 1 462 9714 GSM: +966 5 6666 0662 P. O. Box 295959 Riyadh 11351 Saudi Arabia

Tel : +961 1 302 304 Sabbah Center, 10 Corniche Mazraa Beirut, Lebanon

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GSM: +966 5 6111 7222 Jeddah, Saudi Arabia

Tel : +974-6779195 P. O. Box 4075 Doha-Qatar

[email protected] www.roxmc.com