Death By Meeting

How many managers can identify with my heading today? Sometimes a business day can just seem an endless stream of meetings, with little chance to do more than answer a few emails and return the odd call in between. In fact, sometimes it seems that all managers do is meet and do not actually DO anything.

Meetings in business are of course a necessity. In fact, I would argue that in times of a recession, it is important to meet MORE rather than less.

I have said it many times before, the speed at which this recession is striking is breath-taking - one minute the business looks pretty sound and the forecast is good, the next sees sales collapse, orders dry up, forecast dwindle and cashflow decline sharply. While small businesses can adapt quickly, too many get caught in rich veins of business or a few large customers which are fantastic when the market is strong but hit very hard when the market goes down.

Meetings Are Crucial

The need for faster, more effective meetings is paramount in times of hardship.

As market conditions and customer buying patterns change almost daily, it is critical to meet more often to make sure you are on top of what is going on.

Many firms I talk to wait until the monthly management meeting to discuss the forecast discrepancies, as a good for instance. With a fixed agenda and several topics for discussion, this is the 'formal' stake in the ground or governance for most firms. Again, when times are good, that is well and fine, but why wait 4 weeks to discuss and action news of a major lost piece of business or the withdrawal of a lending facility when it could have a profound affect on the business in bad times?

I have seen many managers with their 'One Minute Manager' or 'How to Run Effective Meetings' books - these are great tools, don't get me wrong, but it is a sad comment that most managers have little clue as to what an effective or productive meeting is. It seems many just call meetings to occupy their daily time and do not actually achieve a great deal other than fuel a cycle of more meetings. The fact is, instinctively knowing what the business issues are and how to go about solving them should a basic skill for every manager. Yet, they more often than not either stick to given formulae or delve into text books for answers, when the going gets tough.

Priorities and Measurement

I don't have a secret elixir or recipe for managing in a crisis but what I do know is that very quickly, the executive team need to decide the priorities of the business, then have some key measurements of its progress against these priorities and then have a process to review the progress and adjust the business to put it back on the right course or remedy the situation. For this, I advocate more regular, shorter, more succinct and action-based meetings with a rapid cascade of actions after.

Deciding the priorities really comes back down to understanding what is going on in every part of the business to a granular level of detail. I cannot stress enough that in the sales and marketing areas, for instance, there is a huge requirement to review every deal reported on the forecast and have an understanding of all the dynamics in the marketing areas.

What I mean for sales is not a wishy-washy look at the forecast but a face-to-face, eye-to-eye review with every salesperson and a detailed look at every deal of significance and look at the situation of each customer. It's time for hard questions about every deal and its chances, about every customer and their situation and what every salesperson is doing to remedy shortfalls and to replace business that will not happen. It is also time to look hard at what existing customers are doing, what are they experiencing in the recession and how their buying patterns may change.

In marketing, it is about looking at how every penny is spent and how it can be geared toward supporting the sales team in remedying a shortfall. In short, it is getting alignment - through finance, operations, administration, IT etc - the business needs to be fully aligned to the common priorities.

These then become the template for the short review and action meetings.

Rocket Science?

Too often sales and marketing executives run their teams with wishful thinking - believing deals will come good or that customers will buy even when the data is obviously refuting this. Then, when all goes to pot, the same executives are the first to hand over control to the finance team and cost cutters and then bemoan the fact they don't understand the business. Theirs is a world of simple arithmetic and they don't see the long term as by the time the company is handed to them, the sole priority is survival.

Avoiding this is not rocket science - it is simple, practical management. If cashflow is declining and sales falling - the adage 'cash is king' becomes the mantra. The accountants can certainly batten down the hatches and collect cash more voraciously, pay suppliers on longer terms and drastically reduce costs. But viewing it from a holistic position, the salesforce and marketing can be refocused to drive a short term opportunity for more cash based sales via special promotions, targeted marketing and negotiating current deals to bring them and the cash in faster. Such priorities can be easily measured and reviewed very regularly, weekly, even daily. If one offer does not bite, try another - if one set of customers don't respond, try others.

More regular, more tactical management meetings really do drive the business around the twists and turns of a recession rather than waiting for the formal ones.

Cut Non-Priority Meetings

It is a direct outcome of this thinking that allows managers to quickly recognise what meetings are simply not essential. If the meeting does not help the business' priorities then do not have it - it's that simple.

Prepare in Advance

How many times, because business seems an endless succession of meetings, do you enter meetings where either you have not prepared or at least one of the other participants has not prepared for the meeting. Too often, there are 'I will have to get back to you' or 'the data was not available' or 'I got called into another meeting beforehand' given as an excuse. The fact is, if the priorities are not priorities for everyone then people will find excuses and revert to type, wasting time and energy on non-priority tasks.

Recessions are not forgiving - ignore them at your peril. If there is one time in your life when you deliberately skip non-important meetings then this is it.

In a recession, there should be no excuses. If managers do not prepare, there should be little room afforded and no tolerance as it is managing for a failure. And for the excuse of the 'data was not available' that too is symptomatic of non-aligned business processes. If IT is not aligned with the priority of producing data ready for the preparation, then a step is missing or again managers are not tuned in.

There is no room for non-alignment.

Use Technology

Using web and telephone based technology allows you to meet more people, more regularly and with less impact of dead time like travelling on the business. It's more green too which means it not only is better for the environment but it is cheaper for the business.

Stop Looking For Answers

From Government to business, we hear everyday that this is a global crisis and so it effectively answers all questions on performance. There is always an excuse.

That is not true. We know that many famous businesses actually started during a recession (e.g, Cisco, Facebook)and many more actually thrive during them. They do it because they do not look for excuses and answers, they look for opportunities, prioritise, align, measure, review and adjust. This comes from rapid planning, executing and a less focus on 'going through the motions' of business like having just the one monthly management meeting.

Companies who survive or thrive in a recession are absolutely on top of their business and understand exactly how they stand and what they are doing for the future, in every part of the company, from top down and bottom up.

I have used the example of Aviva changing its UK subsidiary's name, Norwich Union, during a recession with a £ multi-million series of high profile advertising. Within weeks, they announce bad results, lose 33% of their market value and cut 1,900 UK jobs. This is monumental hubris and lack of management in a crisis. They just did what it said on the monthly meeting minutes and ignored the world around them until it was too late. In fact, it could even be worse than that - they may have actually decided to spend all the money KNOWING the results were bad.

That would actually be close to criminal negligence - deliberately diverting funds into stupid marketing that could have saved jobs. But it illustrates what I mean - priorities have to change in a recession.

Practical Solutions

I have blogged endlessly on the subject of managing during a recession yet I still see companies around me falling into the same traps. Often we get Dragon's Den heroes talking of their fantastic anecdotes and what has served them well. Duncan Bannatyne, who is one of the best of them, actually told the story of one of his managers calling and telling him a rival gym was putting leaflets on cars in the car parks suggesting a £50 reduction for signing up. Bannatyne gave the entrepreneur's response - only 5% of the City's population paid for a gym, so he wanted to focus on the 95% who didn't pay for a gym as there was a much bigger opportunity than just nicking customers from another gym.

But this was not practical advice - certainly not in a recession. If he is not providing enough value to his current members that they see a £50 offer as a good alternative, then he is going to lose customers. What is more, we all know it costs roughly 4 to 5 times as much to find a new customer than to keep an old one. The number one priority for every business must be to KEEP as many of its customers as it can - and if a £50 leaflet on a car window is taking customers away, then Bannatyne's business model is flawed - and ever more so in a recession when customers may walk just because they cannot afford it. Common sense would say the market opportunity on a 'nice to have' item like a gym will diminish in a recession - current cash paying customers are jewels in such an environment. In fact, in a recession, his advice could not have been worse.

But sometimes that's where entrepreneurs fail - they get too caught up in their own world to see the outside. I think Bannatyne was just illustrating a point because I cannot believe he got where he is today on such a course of action.

Sound Thinking

Again I don't have all the answers - but as an entrepreneur who has managed businesses through several recessions, I have learnt the hard way that applying the same principles in a recession is business suicide. Many of today's business people would not have gone through even one recession let alone a few, so solid thinking and good advice is actually very valuable - pithy anecdotes on the road to success from famous people often glosses over the point.

The question always remains - what does that mean to my business?

I have made the offer before, but I am very happy to offer my practical advice to businesses. Please contact me at nigel.dunn@calxeurope.com or 0207 193 2356.

Planning For Survival

I make no apology for bringing up the subject again - we are officially in a recession and there has never been a more important time to understand how sensible, regular planning is a discipline in business that can help you not only survive but flourish.

But I'm A Nimble SME, Why Do I Need To Plan?

I have blogged ad nauseum that this recession has struck at a merciless speed and how, in short trading cycles, household name companies with long, proud trading histories have literally collapsed in front of ours eyes and gone bust.

Insolvency Practitioners and Liquidators are having a boom time as many more companies go to the wall and require their services - it's the nature of the beast.

One way to avoid all this is to do some basic, disciplined planning. And in my estimation this comes in two forms: 1) Front End - Sales and 2) Back Office - Finance. In reality the two are inextricably linked as one fuels the other. However, very often planning is only actually done in Finance - at the front end we have only Forecasting.

Forecasting vs Planning in Sales

It's a nit pick but I would say a basic salesman's forecast is pretty much guesswork based on historical data with a guesstimate on some of the more sizable deals which may have a larger effect. When this is rolled up to management level, very often there are factors and trends applied to arrive at the sales forecast en masse. By that time, the overall number is pretty much a real guess and bears little resemblance to the sum of the raw data. This may actually work fine when sales are buoyant as what often happens is that opportunities are plentiful enough to accommodate the odd deal drop out - the overall number becomes more predictable.

Generally, little planning is involved in that process. It's just an approximation and if sales are close to budget there are no real causes for concern. It's when things start to go wrong that you realise that a bit of planning might have helped.

Planning, when applied to forecasting, is actually reviewing every single deal and working out what is required to win that deal, what margin does it yield, is the customer capable of paying, making sure the terms are agreed, what factors in the market can effect it and what can you do mitigate their effect. This not only gives you a realistic view of every sale but it also gives a very full view of the cost implications of either winning or losing a sale.

Again, these implications seem less important when the graphs are pointing up and to the right, but when there are hazardous market conditions like downturns around, suddenly this level of understanding becomes important.

Right now, it's not a good time for a sizable proportion of your business being in sales to car makers or banks for example and even if they are it is highly likely that the sales may get protracted, become more price sensitive and possibly involve longer payment terms. This level of detail is vital as the Finance Planning is the key part that balances resources to sales.

Financial Planning

Most companies do a budget and a cashflow forecast but it is very likely that SMEs will tend to do these on a monthly, at best, and usually quarterly basis - some may only budget once a year. However, there are plenty of natty tools out there that could make Planning simple and a daily task (cf. www.adaptiveplanning.com)

If the Sales Planning has been done properly, then the Finance side can take the input and do a new level of scrutiny. The first step maybe to review the credit lines to every company on the sales forecast to take account of the prospective sales - the outcome may be to ensure that all existing invoice queries on the accounts are cleared down and settled, credit lines actually raised ahead of a big sale or the credit team can swing into action to look at options to help the customer pay like leasing or debt assignment etc. If the Planning is done properly, Finance can be proactive in helping to deliver sales rather than an order arriving and then tantrums occur as Finance won't extend the necessary credit.

For new customers, get a credit check done. They are not that expensive and they can save wasted effort and heartache. So often a deal comes in and Credit Control (sometimes called Sales Prevention) step in and say 'no credit'. Good Sales Planning will alert Finance early and they can get the checks done ahead and have time to plan if and how a sale can be managed. And there is a downside - sometimes sales are not worth pursuing because the customer does not have the necessary ability to pay - Sales need to know the hard truth early and in these austere times they need to be told if they have to go find another customer to make up the shortfall. Good planning breeds realistic thinking and focuses everyone on the really vital things and avoids 'wishful thinking'.

Once Finance has a realistic view on when sales will drop, when and how customers will pay and if this can be smoothed in any way, then they can take a detailed look at the overall cash position. When times get harder, they can start making decisions on policy to help get resources into winning sales rather than on less important things - a classic example might be cancelling the Corporate Jet when sales drop (take note Citigroup)!

The Results

What Business Planning can do is focus in on the really important things that can directly affect driving sales, creating cash and maximising profits (or indeed, minimising losses in some cases). In harmony, Sales can focus on tactics to close orders and get invoices out early, while Finance can help offer incentives for the customer to settle early or get leasing involved to secure the cash. Meanwhile, Finance can also turn their attention to suppliers to renegotiate or back off the terms of deals so that pain is shared on the cash front.

The key thing is anticipation of issues - when cash is tight you have to be on top of everything from negotiating terms, to collecting cash and extending terms with suppliers and paying as late as you can. One of the biggest areas of cash slowdown is mismatching terms or invoicing inaccurately - communication between front and back office becomes ever more important and this is where Planning really pays dividends so that all discounts, rate plans and terms are agreed formally and the details passed to Finance and equally Finance make sure the invoices are sent out accurately and early. Debt chasing should be more vigorous and leveraging the Sales relationship can often get customers to pay up on time especially when they need something urgently - Sales should have a handle on all that and get leverage.

Expenditure

While cash is king, profit is crucial and maximising it in tough times is a priority. Now is the time to challenge why people travel so much, entertain so often, travel Business Class or use trains when a car could be cheaper or vice versa, then look at all cost lines and squeeze every penny of saving you can so that as much resources can be applied to winning sales as possible and not go on flowery 'nice to haves'.

I have said this before but never underestimate the power of communication with staff. Everyone loves to get good news and pats on the back. But there seems to be an automatic assumption that either staff don't want to hear bad news or they can't handle it or they can't be trusted with it. All of those assumptions are wrong - in tough times, the support and innovation of your staff will help share pain when needed and equally help make sure cost cuts are achieved without a large loss of productivity and sales are made as planned. Leaving them out of the loop can really affect the plan detrimentally as well as ruin motivation.

Get Innovative

So much of sales behaviour is driven by compensation plans and you need to be able to gear the plans toward meeting priorities in tougher times. A profitable deal is not profitable until the cash is in, so why not think of either changing the point of commission payment to when the cash is collected or accelerate the earnings for early payment and the opposite for late payment. Further, focus on success so raise the barriers at which commission is paid but give more for overachieving.

Planning will also reveal the margin hotspots and highlight those deals where margins are low. If such deals are with customers whose payment records are poor then you know that your real margin is lower while possibly smaller deals with customers at higher margin and good payment records are worth proportionally more to you. Make sure you have all the information to make the judgement calls and give the bad news to salespeople early rather than wait for deals to come in or, worse still, snipe at them later. The decisions to accept these deals should be shared.

Tackle Cash Requirements Early

What this detailed Planning will allow you to do is to get a much more realistic picture of how your cash positions will pan out and therefore dictate how much cash may be needed and when. So much of what is going on in business right seems to be guesswork but in your own company it should not be that way. Having all the deals and expenditures explored, terms agreed, collections strategies in place, credit checks done will actually make the task of going to your bank or similar far easier. Why? Because you can answer their questions. There is nothing worse than bluffing in this situation as you don't get a second chance at that but having a detailed Plan with contingencies built in and the even the compensation plans geared to help, the Banks cannot fail to be impressed with your ability to know and run your business. They still lend on trust and that should be your priority.

Get Advice

There are going to be a lot of vultures out there who will want to start telling you how to cut and restructure your business, turnaround experts who are just accountants with knives. What you need is to give yourself a better chance to win business with a cost line that can support it. Too many companies Plan badly and then just hand over the company to accountants when things go wrong.

Plan better now and you will not only survive - you will THRIVE when the recession is over. Make sure your planning is done with your Sales and Customers in mind as the key priority - focusing inwardly will make you lose sight of your path to survival.

For help on planning to survive, call me on 0207 193 2356 or drop me a line at nigel.dunn@calxeurope.com.

Surviving A Recession - Some Sales Tips

OK, so I think we are all agreed we are in a recession. Technically, it's 6 months of economic decline but the reality is household named businesses toppling like nine pins, major Corporates laying off tons of staff and Government Ministers working all weekends to save our Banks.

I still am staggered by the number of people who are not actually planning on tackling a recession but I do know they will ultimately feel its effects - good or bad. So here are some tips which are rehashed from a previous blog article but are worth repeating:

1) Review Your Sales Pipeline

Take a look at your CRM output, spreadsheets or fag packets and sit down every salesperson and review in detail, deal by deal, their entire pipeline. Ask the tough questions, take out those companies who are cutting back, take out industries suffering most from the downturn and focus on the business which is real and stands a decent chance of coming in. Then look at the gap between the new forecast and the old and the expectations of the budget. If there is a significant difference then you know the extent of how the recession is going to hit you short term.

Plan accordingly.

2) Get Close To Your Current Customers

Throw a 'Blanket of Value' over your current billing customers. Go visit them, look at their plans and requirements, make sure you can fulfill them and then make special deals to ensure there is no chance of the customer shopping around. Go that extra yard on service, check they like it, make sure staff are focused on delivering more. Do not be afraid to surrender some profit or extra service to ensure you nail a longer term commitment as these customers will help you ride the storm and be the bedrock of sales when the recovery comes, so give them something in return for a commitment that suits you.

3) Review Your Value Proposition

Whatever your 'Value Proposition' has been to date, it probably at least needs emphasising but more likely adjusting to make sure it is applicable to customers experiencing a recession. It needs to focus on delivering real benefits which can be quantified and are real to customers not just what you think. It cannot be secondary gains or long term justifications, it must be real, and immediate. Customers are not going to look at the long term at times like these and accountants will be far more unreasonable in their demands on returns so be prepared.

4) Make Sure ALL Staff Know The Value Proposition By Heart

It is zero good that only salespeople can expound and explain a Value Proposition. All staff must be bought in, know it by heart and be able to properly and succinctly explain it whenever it is required. Make it second nature.

5) Gear Bonus And Commission To Survival

Most budgets will have to be trimmed in tough times and many salespeople will be expecting to keep their earnings the same while moaning about downturns impacting their business. You have to work on your bonus and commission plans to make sure they at minimum are paid out for survival and nothing less, then accelerate earnings thereafter much faster than normal. The key to any Compensation Plan is having the flexibility to drive behaviour.

6) Join Staff In To The Cause

So many managers will retreat into closed rooms and debate in secret the effects of a downturn, focusing on things they believe their staff should not know or are not capable of handling. It is far more powerful to join in staff to the issues, debate them openly, ask their help and advice and implement solutions with their complete buy in. The power of communication engenders trust and a commitment to a common cause - there is never a more important time to make the staff part of the solution rather than part of the problem.

7) Delay Recruitment Decisions Where Possible

I have seen so many businesses fight to back fill lost heads at the wrong time only to find knee-jerk decisions cost much more in the short and long term. Stop, think about whether you can survive before refilling open positions and think long and hard about what power you actually need. Those managers who scream about it need to step back and look at the bigger picture.

8) Get Creative, Put The Power Where And When You Need It

For open heads, think about innovative, short term measures like contract, highly commissioned salespeople who can put the muscle in where needed but have easily changeable contracts. Think about what sales efforts are best suited - telesales for rapid, wide reach rather than a highly experienced field sales if that's what is required.

9) Focus On The Successes

Think about the recent successes and what sort of customers they are - look for similar ones and take the Value Proposition to as many of them as possible and fast. Clone success - focus marketing into a short term gain and reduce branding exercises which are costly, esoteric and not easily measurable.

10) Make Every Penny Count

Look to your costs and cut out spending on what is not required for the short term. Marketing and training are budgets which are easy to adjust but think about other areas first as these could be vital parts of the armoury to fight downturns and take advantage of the upswing. Look at how salespeople spend their expenses - cut Business Class Travel, rethink mileage costs, mandate lower star hotels, make people justify sales or other trips before allowing them to go.

11) Redouble Efforts

Make sure that work rate rises. The number of visits to customers by the average salesperson across a variety of industries is less than 2 per week - it's very poor. Set goals for the number of phone calls, demonstrations, quotes, meetings etc - call them KPIs if you wish but set minimum standards in line with those of your best performing people.

12) Value Your Staff

If I could have £100 for every company who use a recession or downturn to rid themselves of 'Poor Performers' and feel as if they have done something clever, I would be a wealthy man. You need your staff highly motivated when the recession bites and the fact you have not taken action on poor performers before it starts only shows poor management. Culling staff during a recession is a desperate measure and demotivates staff. Focus on getting poor performing staff up to a higher level. Make the Value Proposition simple and easy for them to understand, help them deliver it properly, show them where to call to get business, what to say and who to.

Give them more help rather than less.

Selling In A Downturn

There are many tactics we can do to help trigger sales but the most obvious are to make sure you profile a viable customer to you, know where to find them, know who in the customer needs to hear your message, know the customer's business enough to be sure you know what your product and service can do for them and quantify it, rehearse and check your message to ensure it rings true, customise the message for the specific customer, and then call and visit as many of these potential customers as you possibly can.

In reality sales is a simple numbers game - the more people who fit your profile you can get in front of, the more chance you have of gaining sales. In a downturn, sales efforts should be redoubled, whether you are set to benefit or possibly lose out - now is the time to work harder.

The one thing I strongly advise is to not take the next 3 months or so at face value. Make sure you ask all the tough questions now and do your planning to mitigate the effects of a recession.

Complacency Is Your Biggest Enemy.

Are You an Optimist or A Wishful Thinker?

Salesmen and Entrepreneurs are optimistic by nature – for them the glass is always half full. After 25 years in business, I have come to realise that sometimes the glass is also half empty and it’s as well to recognise when it is.

The Difference – And Hear Me Out, Please

From time to time every golfer will find themselves behind a large tree which blocks their route to the hole. The optimistic golfer will reason that there is more space between the branches than the solid wood of the branches and so will be prepared to take their chances and play the ball through the branches. Pragmatic or pessimistic golfers will actually play the ball to a point where the tree no longer poses an obstacle and then play on to the green. The argument here is that the pessimist will have wasted a precious shot in being conservative while the optimist will have got a shot ahead, never thinking about the downside.

In all my optimistic golf, I have found that you have no more than a 1 in 5 chance of getting through the tree – and believe me I have evidence to show this. More often than not I will hit a branch yet all my statistical training will tell me that’s simply not possible – there is far more space than solid. I was being a Wishful Thinker.

However, if you stop to consider this for a moment it isn’t so strange. You see we have clubs which have sloped faces which give the ball its given trajectory and knowing the distance we stand from the tree, we could approximate the path of the ball. Given we are not perfect and allow for a margin of error, the ball will probably travel through a circle ahead which will include branch and tree. The uncertainty of the shot and the conditions now play their part and when you home it down the solid effect of the tree becomes more pronounced in that circle. By being more accurate you actually increase your chances of hitting wood rather than decreasing it should you not be as random as the tree itself.

Even when I have selected less sloped clubs to go under the branches I have contrived to get unexpected loft or misdirection and hit low branches or the trunk itself. The fact of the matter is that it is better to take the tree out of the equation entirely as in all probability even if you get through the branches you will most likely be in no better position than the pessimist anyway, unless you are Tiger Woods or Seve Ballesteros.

Even an optimist can see that. But a Wishful Thinker is absolutely driven by the single hope, against the evidence even if it is overwhelming, of getting through the tree.

Golf – A Metaphor for Business?

Well the observation has merit. All Entrepreneurs it is alleged have similar backgrounds and traits which cannot be learnt. It is curious then that my sister has a Training business in South Wales called Learn Kit Ltd which this year celebrated 20 years in business. My sister does not play golf and she will kill me for saying she is not your archetypal Entrepreneur yet through the best of times and the worst of times she has run a business which is now one of the most respected and accredited of its type in Great Britain – that’s some achievement. Particularly as her previous roles were in Public Service and no one in the family had a track record of Entrepreneurial spirit or any money.

In fact I cannot remember a time when she had not worried about the next pound of revenue she was to find or worry equally about the next penny of cost. She was never a traditional optimist but by understanding her customer base, focusing on delivering value, excellence and service while knowing her business model to the nth degree and having a fantastic staff all dedicated to the same values, she has a business which has never performed better than this year.

Why? Because while she may only thinly be described as an optimist, she has certainly never been a Wishful Thinker. And therein lies the rub.

The Entrepreneur and Salesperson's Blight

Wishful thinking is the scourge of all Entrepreneurs and salespeople. I recently met with a boutique pre-seed specialist VC whose company has ‘chased the deals’ for the last 4 years, often grabbing semblances of ideas many with no actual business plans. The most common area of failure was wishful thinking – either the Entrepreneur had assumed too many things about the market or customers, bet heavily on too few customers or horribly misjudged the pace and structure of the buying cycles.

Salesmen too have a terrible habit of over-calling their hand. Operating on gut instinct, experience and sheer blind hope they talk up their pipeline in glowing terms when a pragmatic approach would tell them there was at minimum a lot to be done or they might even be chasing lost causes.

Planning During a Recession

For these reasons, many businesses and particularly sales driven or Entrepreneurial –led companies will find it very hard to face a Recession for what it really is – a severe downturn in the number of opportunities to sell products and service. Dress it up, put on brave face or simply deny its existence at your peril because even if you think you are impregnable, businesses around you certainly are not – and that is the big issue.

Just as you may think you are a great driver that does not stop you having accidents as it is the idiots around you who you cannot always account for. But what you can do is think about as many possibly dangerous situations as you can and drive accordingly to avoid them, or choose to take a train in icy weather for example.

The same goes for business. Planning is crucial and reviewing plans equally so to help avoid the obvious dangers and to drive your business accordingly.

This Recession has been looming for some time and only the housing market in the UK has helped us resist it until now, but the absurd value of growth in housing will likely mean we have further to fall and for longer than most economies. So while we sit on the first wave of Recession and maybe feel ok, there is plenty to come. And the ripples caused by it will spread soon enough. As major companies like BT, Citigroup, Woolworths and MFI start cutting large chunks of workforce and cost, the effect of such slowdowns in spend will surely hit all areas of the market at some point.

So start thinking now, while you have money in the bank and sales. Leaving it too late will inevitably mean you have little course of action left other than severe and sharp downsizing – and you know what? That’s just unforgivable because you could have and should have planned to avoid it.

Just like that golfer and that tree. It may cost a short term loss in momentum, but you will take the risk of failure away by doing so. And you owe that to your staff to do so.

How to Start Planning

1) Review Your Entire Sales Pipeline

Your existing customer base is your lifeblood. Now is the time to know how they may be thinking and planning. What cuts are they going to be making? How can that affect you? Is there anything you can do to mitigate this – maybe by approaching the customer and extending a deal while taking a lower revenue short term? The risk is losing out entirely to a competitor based on cost.

New business – what deals have you in the pipeline? Are they going to be affected by the downturn? What is happening in those potential clients? Is there a plan to represent the deals innovatively to create a better cost case? Be very realistic – wishful thinking is the greatest danger. Look for warning signs early – think ahead.

Realign the sales effort if needed. If you realise you are going to lose 50% of your pipeline don’t just sit there. Look for other sales. Profile what you can sell easily and out the right resources behind it to get them. For instance, you may need a massive Telesales effort so put the force there. Marketing is less effective in a downturn so don’t plan major spend here.

2) Look For Warning Signs

One of the biggest problems with wishful thinking is denying the truth or evidence. If 30% of your customers’ base is in Finance Markets then you have a problem. If a further 15% is in Telecoms, you have major issues to face. In that example, 45% of the business is at direct risk to some extent. Don’t ignore it.

If your customer base obeys the 80-20 and you haven’t a great volume of customers, then you have a problem. If any one customer is more than 15% of your business, then it’s a warning sign. If a single customer constitutes more than 50% of your business, then you have a major area for concern and it’s as well to understand how that customer will be affected by the downturn – and hurry.

3) Salespeople Fib

I can’t put any better than that but salespeople have a tendency to at least be either economic with the truth, wishful thinkers and generally they will flower a story. To the rest of us it’s fibbing. In good times they can probably get away with it as often they will have more opportunities than threats. But in a downturn wishful thinking and fibbing are a massive danger. It is time to get pragmatic and ask tougher questions, probe answers, don’t take things at face value, cross check and go see for yourself.

Many Sales Managers and Directors are Optimists verging on the Wishful Thinkers themselves and so it is often harder to ask your own kind the tough questions as they tend to want to hear a good story and only the good news. So don’t be afraid to use third party managers, the CEO or even external people to do it. The truth is more important than ever in a recession.

4) Be Realistic

For some, even the bad news is not enough of a warning. Remember, in the face of often overwhelming evidence, Wishful Thinkers will plough on regardless. It takes a tough cookie to challenge this but you have to be realistic. More rides on this than egos – people’s livelihoods, jobs and securities.

5) Do It Early

The problem with leaving things late is that it limits you options. Citigroup’s denial of their flawed business model has caused the loss of 72,000 jobs. You can’t blame that on markets because only months before people were paying themselves fat bonuses – they just did not read the situation. Planning ahead can mean the difference between staying in and going out of business – it’s that scary. Plan before the bad times hit and not much will surprise you.

6) Don’t Be Afraid To Talk To Customers

Customers are your lifeblood and they are also part of your future. As you plan, tell them what you are doing and your rationale. Ask them how they see things, how they think that will affect you and what they want to see more or less of from you. Confront this early and do create a joint action plan – document it so that everyone is bought in. The danger is that the customer may forget you in all their knee-jerking and you may suffer in revenues, cost and even lose their business.

7) Join The Salesforce Into The Planning

Salespeople have a wonderful habit of blaming other people, competitors or markets. They have never been outsold. If you want a bad news session one the [proverbial hits the fan, you’ll get it. However, if at the start of early planning you ask them to be more realistic and come up with action plans to make up differences then they will respond more favourably. Salespeople like to see paths to the future, the air between the branches if you like. Sometimes you have to show them it but once there you will be amazed at how they can respond. Just don’t heap bad news on them – or else they will become part of the problem.

8) Adjust Targets & Compensation Plans

You have to lead by example here. It is no good hitting salespeople in the pocket if you are not prepared to have the same done to you. However, if sales are expected to go down, then so have costs. Again, make the position clear and do it early. Come up with innovative plans like gearing the commission higher for higher achievement but move the thresholds – don’t make things unrealistic as that’s no fun. Also think about deferring bonus or targets so that they will be paid in better times – it’s better than just taking a chunk of earnings away for all time.

9) Practice What You Preach

Whatever you do, make sure that the whole organisation is joined into the plans. There is a huge risk that you can ask staff or salespeople to take earnings holidays but don’t then organise an executive offsite in the Bahamas or a Chairman’s Club in Florida. I worked at one company when on the day we shut our Manchester office lay off many staff, the CEO took delivery of a shiny new red Bentley as a company car. He did not have the nerve to drive it anywhere for some months although it was forever known as the ‘Blood of Manchester’. CEO’s taking massive bonuses when cutting staff is plain disgusting frankly but it happens all the time.

10) Don’t Blame The Salespeople

There is also a massive and easy tendency to blame salespeople for bearing bad news. While they can deliver such news with dour aplomb when the market goes sour, without sensible direction on alternatives beforehand they are not to be blamed for the conditions caused by recession. Many managers go into high-blame mode, start losing their rag and even start firing people to make them feel better. But usually that’s because they haven’t anticipated the market, planned for it and so are equally to blame for the mess they are in. At this point, the company will already be on the slippery slope as replacing people takes time, money and management plus a lag for productivity while many will see open headcounts as savings. You can see the pattern develop early and so plan early.

‘Us and them’ management never got anybody anywhere. It’s usually around this time that a manager will notice that someone has taken a lot of sick leave, works flexi-hours, wears no tie, is asking for holiday – you know the sort of normal things that in tough times are construed as slacking. Usually at this point huge management gaffs are made in the eyes of the law so again, plan early, anticipate and communicate.

11) Mobilise Your Salesforce

Now is not the time to reduce effort. Take a long hard look at who is successful and how and why they are. If it is anything like reality, the majority of highly successful salespeople have similar habits – they work a little harder and smarter and they concentrate on repeating their successful formula wherever they can. They tend to lose fewer deals, sell at higher prices and generate more long term customers. If you have a Customer Relationship Management system (CRM) like Salesforce.com or Act!, then you can easily check what people are doing. You will quickly find the habits of successful people are clonable and you should endeavour to do so and typically they will make more calls, demos, visits etc while closing more sales. Share their habits for everyone to use them.

12) Constantly Review Progress

Once you have started planning, a recession has a habit of changing things. So while you may plot courses of action, you will find things change. You must continually look at your methods, value proposition and efforts and make changes as quickly as possible. The last thing you need to be doing is worrying about making cuts when the market is starting to recover but too many companies have very little flexibility.

13) Small Is Beautiful

One of the advantages of SMEs in recession is that while they can feel the body blows of major customer decisions harder, they can also effect change much faster. Large companies cannot change quickly and so when there are fewer opportunities to chase, small companies can chase them faster and harder. They will be hungrier for business, more adaptable to customer needs and more ready to make sacrifices to get business. This is a huge advantage and it all comes to the fore if the SME is realistic about opportunities, plans well and constantly reviews.

14) Think Small, Act Big

For many salespeople presented with the prospect of making sales in a downturn, there will be a period of inertia when they question whether the task is achievable. Even half-full optimists can find selling in a downturn tough. It is all about helping salespeople see the path to success. When presented with a tough sales target, the best thing to do is to work backwards. Think about the average deal size and how many deals are required to make the target. Then think about the normal hit rates of how many prospects are required to make a deal, then how many sales visits are needed to create a prospect deal and finally how many calls are usually needed to get a meeting. Suddenly the task does not look as daunting as usually less than 8 meetings and 100 calls per week can make significant targets. Whatever way you calculate it, your daily tasks are more than achievable in the main and that’s how optimists think. Just make the pessimists see it the same way. From small, repeatable actions, big targets can be achieved.

15) Reward Correct Behaviour and Success

While costs will be constrained, the one thing that must be delivered on is success against the revised plans. So make sure achievers are rewarded for their efforts. If you want people to make 50 calls a day, reward them in some way even if it is only recognition by a pat on the back. For real success, make sure you deliver on all the remuneration promises and don’t suddenly have a volte-face when someone blasts a target. Just plan it carefully as this is where many managers go wrong. They think of something in a knee jerk way and when it’s achieved they claim it was luck.

Don’t put anything out as a reward you are not prepared to honour and when you give, do it with a smile.

Conclusion

I have concentrated on sales planning here – the art of being realistic in the face of a downturn. Don’t confuse this with cost cutting although there may be a harsh realisation when the planning starts that a hole may appear in the revenue some months down the line. If that is the case, either plot a way around it as an astute golfer may do with a tree or make tough decisions early. By tackling it early, you may avoid cutting staff by merely stop replacing headcounts or cutting other budgets.

Sales planning is crucial to avoid Hitting The Wall as I call it. Denial is too easy in the face of a recession, wishful thinking even worse. By planning ahead and tackling the tough issues before they arise, you will not only preserve your company in a recession, you may even thrive and you will certainly be best placed for the upswing at the end.

Turning Negatives Into Positives - Communicate

I recently read how workers from Caterpillar in the UK joined in with management and agreed to go to more flexible working in order to save 300 jobs. It's that kind of open communication and joining in staff that will help combat downturns.

Face Reality Together

Downturns, recessions and credit crunches are not going to go away by not facing up to them and their consequences for your business or markets. Equally, if managers have hard decisions to make about the business, it really is no point in not using the power of the workforce to help understand what can be done. You would be very surprised at the results that can be achieved.

Trust is a vital component in leveraging the power of any workforce. Lose or abuse their trust and you will surely drive a divide between management and the staff that will be very hard to recover in the future. As BT may well find out, suddenly announcing the only way forward is to cull 6% of the workforce by March and possibly more in the future is about the worst way to announce to the staff, let alone the shareholders, suppliers and customers that there may be a problem in the business.

And that's the crucial word 'maybe'. To what extent did BT anticipate this problem and what could have been done beforehand to prevent such drastic measures that may end up in alienating the remaining workforce? The 'maybe' has turned into reality as BT 'Hit The Wall' rather than avoid it.

Joining in The Staff

It presupposes that management can understand that a downturn and recession will affect the business in some way - it always does but you would be surprised how many well qualified and experienced executives just deny it can affect them. It does, take it from me - and it could be positive but it is highly likely to be negative.

So often I hear people say 'There will always be a market for my product in good times and bad.' Tell that to BT. Reality is a swine, it really is.

So once management has come to terms with the fact there are things to consider, the next thing would be to start taking a detailed look across the business and understanding how well the business can cope with a downturn. How better to do that than ask those responsible for all parts of the business helping make that assessment and reviewing the results in order to clearly understand the problems. This way, the very same people can be part of the solution and responsible for it. If cuts need to be made, how better to identify where and how than the very people responsible for cost deciding what and how.

It makes the entire workforce joined in, bought in and accountable for the business well being. Better still, imagine if the right decisions are made and the company gets through the downturn - you will have the undying trust and loyalty of a workforce that would literally do anything for you.

Utopia?

It may be a Utopian view, but believe me, leave out the workforce in tough decision making and they will distrust you. That's not a good position in which to weather a storm like a recession. And when it comes to emerging the other side, just when you put the foot to the accelerator there will be little there as the remaining workforce start using the upturn as a time for bargaining.

My Advice

• Reforecast your business now - look at every deal in the pipeline, challenge it and check its validity
• Make sure you communicate the revised forecast widely, what the assumptions are and what that means to the business in terms of health, borrowing and costs
• Plan ahead - take a detailed look across your business
• Join in as many staff as you can - communicate the issues up front, make sure they understand what may happen if nothing is done.
• Make sure you plan and communicative early. Doing it too late disempowers people in being able to help. Don't use the moment to deliver a faite accompli
• Ask staff to quickly identify weaknesses, areas of cost saving or flexible working or different methodologies in order to make sure the business is able to withstand the pressure of a downturn
• Be realistic - look at all aspects of the business
• Listen to what people have to say as alternatives - don't make your mind up beforehand.
• Make sure you have a vision of where the company needs to be and when in order to take advantage of any upswing
• Make sure you have checked and rechecked your forecasts

Riding out a recession is hard enough. Make sure that workforce is on your side. Don't put the company in the hands of accountants who have no understanding of the long term and potential.

Above all, never, ever underestimate the power of your workforce and never abuse their trust. They have a habit of remembering at the most unfortunate of times.

Are You Planning For The Future?

More than half the respondents to a 2008 survey by the BPM Forum, a business performance management group, said that their budgeting process is overly burdensome. In general, employees "don't buy into the fact that [budgeting] is an important part of the strategic-planning process," says Daniel A. Szpiro, professor of accounting at Cornell University.

Which Half Are You In?

So in which 50% do you sit? Budgeting is burdensome or not? I have to say my personal experience was that budgeting was an annual process and very, very time consuming with endless rounds of complex Excel spreadsheets which had to be poured over and finger in the air estimating. The more scientific we got, the worse our estimates became because we only did it once a year and you took in an annual guess rather than look at the situations as they develop.

Recently, I have teamed up with Adaptive Planning and that's all about to change. Theirs is a SaaS based system which takes your cost and budget data and puts it into a multi user, powerful but familiar spreadsheet-style format that allows everyone to budget and plan simultaneously and to make budgeting, forecasting, planning and reporting an everyday task rather than annual.

And gone are the days of countless rounds of complex spreadsheets being rolled up and down the management tree and consolidated as each manager thinks differently, and of tiny errors getting magnified as the sheets are consolidated. Adaptive Planning have a system which cuts down time to plan by 70% and has an in-built audit and work flow for make sure everyone agrees with the assumptions on which the plan is built. Accountability is an integral part of the system.

So Why is Planning Important?

Linking budgeting to planning is a powerful way of assessing your future because it allows you at each step to measure how much impact every decision you make has on your bottom line.

Usually after an annual budget, companies only reforecast on a cigarette-packet level and try to marry that to a quick fire P&L. Then people start making decisions on tactical moves and justify it in measuring the isolated effect of that decision on costs and revenues. Too often I have seen 'double accounting' for a cost saving or financial impact and when the year is out, you find that the supposed incredible uplifts in profits actually didn't materialise.

I believe that's because most businesses do not have the ability to 'globally' analyse their business on a day to day basis and be able to truly measure the financial impacts of individual and collective decisions.

As we approach a tougher business climate, it is even more important to understand the impact of every decision and to be able to plan ahead to take account of the changing environment and market conditions - waiting until the annual budget process kicks in is way too late.

Is This Normal?

Listed company announces annual figures and shock the City with their sudden lack of performance - ah, but here are the plans to actually put that right, say the stiff-collared management to shareholders. Does this sound familiar? It's like as if the company suddenly found out their business was underperforming and in the annual budget process wrote a new plan to remedy it. Don't businesses actually plan on a more regular basis to avoid poor performance?

Apparently not. So often I have sat in businesses where each quarter is a massive shock, good or bad, like no one knew about it.

But Is This a New Management Nightmare?

Forecasting is the bain of the life of a salesperson. So more forecasting and planning sounds like a bad idea - it gets in the way of doing their job, are the arguments. But as Bill Soward, CEO of Adaptive Planning, points out in CFO Magazine recently, if the marketing guys are planning a 3 month push, you need to understand not just that sales may increase, but what resources will you have to beef up to accommodate or take advantage of the plan. It's actually common sense.

Adaptive Planning to The Fore

Most large firms have expensive, complex budgeting systems. Now Adaptive Planning make it simple and affordable for Medium and even small sized companies and organisations to be able to implement effective budgeting, planning and forecasting systems which can be cascaded down the organisation easily and make business planning an everyday task not an annual nightmare. Out with Excel nightmares and in with simple, easy to use and centrally based consolidated outlooks on your business.

As a CEO facing a tougher climate there has never been a more important time to have full control of your business - take control now and make your business far more resilient to the vagaries of the market and plan ahead knowing the full impact to your bottom line - BEFORE it happens.

Call me on +44 (0)207 193 2356 or email me at nigel.dunn@calxeurope.com for more information or a discussion.