What To Do When Sales Are Down
In a slow economy, if your sales are down like most companies, it is likely won't be getting top dollar for your company. In addition, statistics show that 90% of closely-held businesses in the US are owned by soon-to-be-retiring baby boomers, and you will need to differentiate your business in order to maximize your selling price when sales return to growth mode.
What Should You Do?
Since sales are probably down right now for you, now is a perfect time to switch gears and work on your business and not for your business. What does that mean? It means:
- taking care of all of the things you didn't do when you were so busy selling your products and services or running your company
- making sure all of your corporate formalities are in place, doing general business housekeeping, and maybe meeting with your tax attorney to apprise them of changes since your last communication
- making and implementing new business plans to adjust to upcoming changes in politics, the economy, and technology
- determining value drivers for your business and implementing changes to increase value
- planning for your exit from management or ownership of the company at some point down the road
In a previous article, 10 Things You Can Do To Increase Strategic Value, we discuss 10 general themes that you can do to increase value. Here are some basic ideas on some of these items that might provide you a starting point:
- Establish CONTRACTUALLY Recurring Revenue. Develop a new "product" that complements your business and requires users to pay a monthly or annual rental, licensing, maintenance, or warranty fee. Start offering this product so you will be ahead of your competitors when sales pick up again.
- Overcome the High Barriers to Entry. Now that you have time:
- Do testing that qualifies you to get certain customers
- Get a new license or certification that gives you more exclusivity
- Add a new process that makes your product greater
- Work on developing and patenting new intellectual property
- Build a Great Website. These days, a website may be the first thing people see when they want to learn about your company. Make your first impression the best possible. Building an effective website takes a lot of your time to develop content, pictures, etc. So do it now if you don't already have a great website.
- Build a Management Team. Even though cash may be limited now, start small. With the management pool growing recently, find someone to handle more of your duties and test their capabilities and train them during this slower period
- Become an Expert in Your Industry. Being an expert is not as easy as knowing a lot. You have to make sure people know that you do know a lot. Writing press releases, writing blogs, calling editors and other industry leaders takes time. So why not do it now?
- Find Simple Ways to Innovate. Get your sales people, technical people, and management together and brainstorm market needs and appropriate solutions for your customer base. Have one of your sales guys that may be low on work lead the project.
- Diversify Your Product Mix. Integrate! Whether horizontally or vertically, why not use your existing fixed costs to increase your sales when the market picks back up or maybe even get back to your old revenue values right now with new products.
Exit planning, as covered in our numerous other articles, is a critical tool that helps you plan for ownership and management transition in the case of a planned or a catastrophic exit. In both cases, you want to be positioned in the best way possible so that you and your family are comfortable and have the least tax liability possible. Exit planning requires a team consisting of a tax attorney, estate planning attorney, accountant, and a financial planner. If that team hasn't been built yet, now is definitely a good time to start building it. We know finding and interviewing professionals is a time consuming process and we can help with our list of pre-screened professionals. In addition to building the team, you need to know how to guide the team towards an effective exit plan. If you don't have experience with producing an effective exit plan, using an exit planning professional such as Orion Capital Group can be a great way to save professional fees by presenting your goals and decisions in the most organized fashion. We have several levels of exit planning services that we provide including one we do at no charge.
As you can see, there are so many things you can be doing to position yourself when sales pick back up both to increase your business income, business value, and personal value in the future. If you need help with brainstorming what you could be doing at this time, contact us. We would be more than happy to help provide you insight at no charge. Our strong and diverse business backgrounds make the team at Orion Capital Group an excellent sounding board and a wealth of ideas.