Remember when you figured out that you should have sold in 2006? Or bought Apple stock in the 80’s ….and other smart folks did? It probably still stings when you think about what you missed. Well, here’s a second chance, if you’re up to it:
Your biggest business problem today is right in front of your nose, and if you’re even a little like most businesses, you’re missing out on the biggest opportunity in years!
For many, if not most businesses, the biggest business problem today isn’t China, WalMart, or competition. It’s not the U.S. debt or taxes. It’s not accountability, or available capital, or local government or health care. Those can be problems. Yet indicators today show that Problem Number One is Sales. Too Much Sales! Sales lurking just out of sight….or looming just in sight….
A CEO of a significant software firm told me that he is “Managing Demand”. Translation: He’s holding back orders because his company can’t handle what’s out there. He’s struggling to find the five technical specialists that are essential to the business he could have….if he could handle it!
Antoine Van Agtmael, an emerging markets expert, is quoted in the Wall Street Journal as believing that the most dynamic emerging market in the world is……….the United States. “For the first time after 40 years in Asia,” he recounted, “the Chinese complained about American competition.” Labor costs in the US are stable, but have increased by 15 percent in China, annually. He estimates that about 200 companies have moved offshore locations to the U.S. mainland in the recent past. “Nine of ten companies a decade ago were thinking of building plants in China,” he points out, “today it’s about three in ten, and five in ten want to build in the U.S.”
Which of these real-life “sales problems” are you having?
Hint: They are signs of missing the sales surge.
1. Weakness in the firm’s systems. “System” is “how we do things.” It’s more than IT. It’s conventional wisdom + culture + tribal knowledge. The weaknesses suddenly multiply faster than they can be addressed, overwhelming leaders.
2. Invoice late, causing cash to bounce between too much and too little. A manufacturer has unpredictable cash flow because his invoicing system is drowning in new orders. The order surge forces expediting in both engineering and production, and schedule changes hide true completion dates. Result, invoicing is late…..and so is cash!
3. Push the company past its expertise. The largest customer has ramped up orders faster than this specialty technical manufacturer can handle it. To try to keep up, the manufacturer is hiring faster than he can train workers properly, increasing scrap and errors and slowing production.
4. Rush to hire people. They turn out to be a poor fit. Seeing a good bump in sales interest, a CEO hired five sales people, and all were gone in less than 6 months.
5. Wait to hire critical people. A firm with a national reputation for quality lost two major contracts in two months, failing quality inspections that would have been a cakewalk in the past. Reason? They had fired their top quality engineer and their process engineer, and hadn’t hired replacements because of “uncertainty in sales”.
6. Sign sales deals that hurt the company. A new engineering manager with proper technical skill prepared cost models that won a major contract, enabled significant equipment investment, and produced a jump in revenue. A closer look found a dramatic costing error. The deal was dumped in less than a year, the single-purpose machines lie idle, and the company burned cash it needed for expansion.
7. Waste a pricing advantage. Growing at 25% per year, a firm ignores its significant value advantage, and continues to price below rivals whose basic product is similar, but lacks the powerful value features. Earnings are weak, and the chance to market the value and raise prices and profit floats out of reach.
8. Disappoint good customers, risking future business. A 40% sales increase in a new facility confused nearly every department in the company. Shipments were repeatedly and dramatically late, wasting time mollifying customers, wasting labor expediting orders, and draining employee morale.
9. Cut corners on quality. A high-end residential specialty construction firm watched its cash drain away in the midst of strong demand. Finding repeated quality gaps in installation, the owners fired their supervisors and took over job supervision personally. They’re at a pace they can’t maintain, trying to screen and place key supervisors to get them back to managing the business. A tricky dance on a good day.
Here’s what “missing out” looks like now: Keep on acting like sales are scarce.
There are reasons for the foot-dragging, of course. Here are some:
1. Uncertainty about government actions and capital markets. Even straining out the noise, it’s hard to see clearly for the two-three years into the future that most leaders prefer, as they make major investments in people and equipment.
2. Caution from the damage of the recent recession. Few escaped without scars, and the emotional part of those scars is a kind of PTSD. Post-Traumatic Stress Disorder is a real result of shocking, unexpected injury. We know about it from war. We ignore it in business, even though our power, sense of self and ability to make a living are wrapped into it. Moving ahead anyhow is called courage. No one is calling it easy, but check again. Now may be your time.
3. Firms are smaller and weaker than before the downturn. Cuts made in the downturn re-designed much of the firm, lowering its volume “sweet spot”, making it less efficient at higher levels, and clumsy in adapting to rapid growth.
Results:
• Hoping in vain that “we can re-hire skilled people when sales come back”.
• Replacing those skills takes time, and competition makes it harder.
• The training gap drives a performance gap, until skills and work relationships are rebuilt.
• The loyalty that carried folks through tough days remains in fewer people.
• The culture risks a split between the few “old-timers” who were kept on, and the new folks whose commitment and skills are essential to success.
So not only must firms ramp up the hiring process, but training and team-building must perform at record levels, perhaps for the first time in history.
What’s a winning CEO to do?
1. Take excellent care of today’s customers.
2. Challenge your leaders to double today’s growth rate.
3. Act like there’s lots of business available.
a. Talk to three times as many potential customers as you did last year.
b. Picture and discuss with your leaders: What will 2015 look like?
c. Plan for lots of business. Planning is cheap.
4. Invest in people and equipment as soon as you can. It often takes longer to ramp up production capacity than it does to bring in new orders.
These are the best times of all. The sooner you act the more success you’ll reap!
©2013 Jim Grew. All Rights Reserved.