Spending your way out of the recession - A little time, not a lot of money.
Everywhere you look there are ad’s to beat the recession – usually based on discounts and offers – but still asking you to spend money. The Government itself advises spending to get out of the recession.
It’s never quite that simple – is it?
For businesses to survive they still have to spend – but more wisely – top marketers and entrepreneurs are saying that the money is still there but it’s moved elsewhere – many companies thrive in these times. Companies need to change – to adapt. Planning from a different perspective – dealing with businesses that are profitable – they’re still spending – finding ways to get them to spend more. Consider losing the low profit “pain in the butt” customers.
For the management accountants this is a time to work more closely with the sales and marketing departments to plan on future campaigns – not to cut but to improve. Focus on what works and identify the best customers and markets to go after. Identifying the most profitable products is more crucial – using ABC and traditional costing – unbelievably many companies have reduced their costing to a bare minimum or do not cost at all but rely on market forces. This is inefficient and the more efficient the company the better the chance of survival and growth.
As in previous downturns companies turn to labour cutting and reducing spending on advertising and marketing, pushing harder on debtors and taking longer to pay creditors – not really the best way to run a good business – There is a correlative cost of marketing to sales achieved – if done properly – the more you spend the more business you get. Aim to get a ROI of at least four times your marketing spend in additional gross profit. Now is the time to negotiate better deals as most advertisers are struggling. Get more from your staff – a better quality product may allow you to increase you prices. Few companies invest in new equipment, people or systems – but they should – if it improves their chance of survival.
Every company has weaknesses and can improve their efficiency in a number of areas. It is the opportunity for management accountants and FD’s to be creative and proactive.
The survivors in recessionary times will tell you they’ve got more from their staff and are stronger when the good times return. This is no accident.
Accountants are now under more pressure to produce figures faster – banks and investors are more keen to see how well the business is surviving. To achieve this and allow time for more creative and objective thinking the accountant must step back and look at ways to produce figures faster and identify waste.
Typical problems that should be addressed are:
- • Taking too long to produce the monthly management accounts – there are ways and products to make a considerable difference – 2 days to less than an hour is not untypical.
- • Checking that reports produced – including ad hoc – are produced quickly, are meaningful, accurate and necessary. Many management accountants spend too long on MS Excel and not enough exploring their businesses packages to produce the reports in less time and consequently not enough time on creative input in survival and growth.
- • Ensuring your business package meets your business’s needs – produce a check list of everything your business needs and score out of ten how your package meets those requirements – you may be shocked. A score of less than 80% is possibly a sign that you should be looking to change
- • Having taken on a new business system getting adequate training from your software dealer is all too often hit and miss as they often do not do enough research
- • Fully exploring your package’s reporting capabilities and the use of CSV’s , XLS dumps and ODBC.
- • Identifying tasks that take too long. E.G. A bonus system that took 2 days to manually calculate was reduced to 1.5 hours with an Excel model and was more accurate.
- • Indentify duplication of effort where more than one package is used in a business
- • The installation of a new package or the improvement of existing systems needs careful planning and may well need advice – from an objective viewpoint
- • Whether it’s Sage, Iris, Pegasus or Diamond Discovery (not a new package but one that delivers well on functionality and is worthy of consideration – it’s also good value for money – necessary in difficult times) or a bigger package can you get it to help your business survive or even prosper in the downturn – that must be the goal for accountants.
There are a number of time saving articles which can be accessed free from
www.omegaresults.co.uk/info/articles/ and a free dvd available from
www.omegaresults.co.uk/about/enquiries/free-dvd/
Bob James FCMA
Omega Results Ltd
May 2009
