Wednesday, October 24, 2012

How to Get High Returns on Your Hidden Assets

The summer is over and it is the perfect time to take a fresh look at all of your assets, bring in new perspectives, and get the resources you need to improve your business now.  This is the time to focus on your most important, highest return projects.  Don't wait until you clean up all your other loose ends.  Stay out of the trap of working on your lowest priority projects before getting to your highest priority projects.

This newsletter is designed to give you some tangible and valuable ideas on how to break out of this trap, focus and move ahead on your high payback projects today.

During our 20+ years of consulting with many small, medium and large businesses we have been able to identify and take advantage of many significant opportunities to help CEO's bring their major projects to fruition.  We are often the turbo-charger to get more out of all of your assets to help you realize your goals.  For example, many times we find that our clients have unrecognized and underutilized assets that they already have paid for and we help them to increase their returns significantly, as follows:

  • Fully utilizing your employees' knowledge:  the employees frequently know more about the business, on a collective basis, than the CEO and are a tremendous untapped source of valuable information.  But it is extremely difficult for a CEO to find out what the employees are really thinking or to get past barriers built up over the years.  By  bringing in a consultant to team with employees, the CEO is telling the employees that: he/she respects their expertise, is serious about wanting their input, there are new opportunities for employee advancement and visibility (by providing new ideas) and that the employees can speak confidentially, if desired, for the benefit of the company and themselves.  Tremendous value can be generated in many areas because:

1) Employees will provide their knowledge on issues that go beyond their current role.  They frequently have a storehouse of untapped information from having many face-to-face/first-hand meetings with your customers and vendors.  During these meetings and discussions, they get valuable feedback on product pricing, quality, delivery timing, product features, packaging and potential add-ons.

2) Employers working in teams can take some of the burden of innovation and implementation off of the CEO.  They will pull together and commit to achieving success instead of pulling in different directions.    

3) Employees don't like to use a suggestion box.  They want someone to discuss  their ideas with them to try to implement them in a practical manner.  With a demonstration from the CEO that each idea will be taken seriously, they will often come forward with great ideas for potential innovations, cost reductions, new efficiencies, decreases in "shrinkage", better usage of inventory and methods of collecting receivables.  

  • Breaking through your managerial constraints: your company now may be limited more by the lack of middle management resources than a lack of cash, but this constraint often can be broken quickly. CEO's frequently are afraid to give much more responsibility and authority to their management team.  On the other hand, with the help of an experienced consultant, these managers could succeed more easily and free-up more management time.  They will be able to take on more work and help you complete your high-return special projects.  This also would cause the rest of the business to be managed much more effectively.  Without this boost, however, it will continue to be very difficult to get more out of your existing management team.  

  • Increasing your return on professional expertise: Your company probably already has paid for at least four outside advisers (your banker, accountant, attorney and insurance broker) to go up the learning curve on the intricacies of your business.  After working on your company's investments, business plans, financial projections, acquisitions, divestitures, real estate, financial statements, tax returns, audits, employee disputes, benefit plans, collections, etc., these professionals are a tremendous storehouse of knowledge and ideas about potential business improvements.  With a small amount of guidance from an experienced management consultant experienced in working with other professionals, a CEO could use these professionals judiciously but much more effectively, rather than try to keep them at bay.  This could significantly improve your return on your investment in these professionals.  Your already have paid them to go up the learning curve--these professionals are often-overlooked assets.

Paradoxically, CEO's sometimes try not to involve these professionals in their business in an effort to reduce cost.  This is the equivalent of buying a large, expensive and flexible piece of equipment for one application and then purposely trying to never use it again.   

  • Strengthening knowledge of your competition:  Salesmen, engineers and others in your company have a substantial body of knowledge about competitors' product features, pricing and upcoming new developments.  They also  have many contacts outside the company through which they could get highly valuable additional information.  If you seek out this intelligence and communicate it across departmental boundaries as an integral part of your business planning process, your management will be much better informed and your investments will generate much greater returns.
  • Tapping your customer and vendor relationships:  CEO's frequently miss opportunities to gain assistance from two of their most important stakeholder groups, their customers and vendors.  This is because CEO's jump to the conclusion that customers and vendors will abandon them in a heartbeat at the first hint of trouble.  The reality is that this is not the case--customers and vendors also have developed a strong reliance on you because you, in turn, are one of their stakeholders too.    

Vendors know that many other customers, particularly in this economy, also are having great difficulty and they know that it would be hard for them to replace you.  They also may have tailored their company to meet your needs and it might take a long time before they can replace you and collect from their new customers.   

Your customers also have come to rely on you and trust your processes and quality. Their personnel may have built strong relationships with your employees and they may not want to change.  
Momentum is on your side with both your customers and vendors.  They generally want to help you.  For example, they can slow their collections of receivables from your company and can speed up payments of payables to your company, etc.  This additional credit may not be available to you anywhere else. But, you must communicate with your customers and vendors properly and build their confidence and trust.  If they think that you are taking advantage of them they will run the other direction as fast as they can.  
  • Freeing up wasted resources in your underutilized buildings and equipment:  Buildings and equipment often are much larger and more sophisticated than needed now because they were sized and priced based on your needs before the economic downturn.  They are likely to remain too large and more expensive than needed for years.  This represents your sorely needed cash that is trapped in these assets.  Through effective planning and negotiation, you often can eliminate this cause of waste and free up valuable resources.

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