Draw on Business Basics When the Sky is Falling
By Karen Dry and Linda Hebert
The next in a series about the tough choices business owners may have to make to survive the housing downturn. The article is an excerpt from Building Women magazine and addresses current market issues and offers real solutions to hard questions.
Housing market headlines couldn’t be more pessimistic. Projects have stalled, new business isn’t coming in and you can’t see feasible options in the midst of business turmoil.
You need solid information on what to do.
Business management consultants say that this is not the time to blindly seek out a silver bullet solution. Instead, they recommend that you dig deep and go back to the basics to find the best strategic direction for your specific business situation.
That means taking a breath, evaluating where your business stands in the industry and making realistic projections.
“People are often so focused on the problem that they forget to focus on the solution,” said Misti Burmeister, CEO of Inspirion Inc. based in Fairfax, Va., a consulting firm committed to helping organizations and professionals reach their potential. “The worst thing any business owner can do is to act out of fear.”
So how do you find this information without paying a monthly retainer to a consultant you can’t afford?
“Don’t be afraid to go to your network and ask for help, because you can’t do it on your own,” said Burmeister.
Many builders cannot rely on their traditional business base right now, so they need to hit the pavement again.
“This is a particularly bad time in the industry, but there are always challenges in the marketplace,” Burmeister said. “You have to shift gears and think about the unique areas where you can add value because, even in the slow economy, people are still trying to buy and sell, remodel and build homes.”
Burmeister said people do not simply buy things, they do business with people they trust, so be the trusted and respected go-to professional. That’s where you can build relationships and grow new business areas.
“Women are inherently resourceful and natural relationship builders,” Burmeister said. “However, when they get into business, women sometimes think they have to be like the boys and don’t do what comes naturally.”
“If women did what they know best, they would stand out and ultimately get the business they want,” Burmeister added,
Consider the following fundamental questions as you determine the direction you need to take in these challenging times.
- What is your position in the marketplace today?
What are your distinct advantages and will they continue to be valid?
Write them down and identify your competitors in your community, state and other parts of the country. Find out how your competitors are faring. Are you doing worse or better than them?
If you are doing worse, what are they doing or offering their customers that’s different?
- How much market share does your company have?
If the market continues to shrink, can you manage additional loss of market share?
Once you’ve determined your market share, determine if what you offer your customers is unique enough to entice future business. Create a list of the pros and cons of what you do versus your competition.
- What is your current cash flow?
How much does it take to sustain your business on a monthly basis?
In general, most thriving businesses try to have a cash flow that covers at least six months of operation. Create an Excel file that includes the basic overhead expenses you pay.
- What's the current status of your accounts payable and receivables?
Some business owners don’t actually have a grasp of what invoices they need to pay or what money is owed to them.
When times are good and cash flows easily, we forgive and forget many of the smaller invoices. Now that times are lean, if you put off collecting or billing some items, you are potentially forfeiting cash that could be crucial to sustaining your company.
- How loyal are your customers?
Pick up the phone and connect with each of your clients.
Find out how they’re doing, if they have any new projects available to you and if they can refer you to new business opportunities.
If you’ve been the vendor, supplier or contractor that they’ve come to rely upon, they don’t want you to fail any more than you want to fail.
Once you’ve weighed your best attributes against the hard truths of the downturn, it’s time to make a choice about how you want to proceed with your company.
Whatever you decide, decide now because inaction on your part will most likely result in quick and unhappy consequences that are out of your control.
NAHB Women’s Council Vice Chair Karen Dry is president of Garrett Interiors, Inc., an interior design company based in Westlake Village, Calif. specializing in model home merchandising along with residential, commercial and hospitality interior design. For more information, e-mail Dry, or call her at 818-991-3487.
Linda Hebert is the chair of the Women’s Council communications subcommittee and president of Diversified Marketing & Communications, of Pleasanton, Calif. For more information, e-mail Hebert, or call her at 925-577-5300.
Next: Assess your business choices — you’re going to ride it out.