It Can Fuel Your Growth or Be Your Fatal Flaw
By Judith M. Guido
There is not a day that goes by that we don’t hear from news outlets or colleagues about supply chain challenges and inflation effects on people’s business and/or personal lives. Some people throw their hands up in frustration as if they have no control over their financial destiny.
The good news is that you have more control than you think you do. While there are limitations on what you can do with global supply chain issues at ports or the shortage of truck drivers or rising prices at the gas pumps and elsewhere, let us focus on the ways you can control cash flow and finances. This way you can make sure your money works for you and not against you.
Cash is the oxygen that keeps a business alive. How quickly—or slowly—it comes in and out of your organization determines the overall health and likely success of your company. Pre-bill, offer discounts for quick pays and automate pre-set timed invoicing wherever you can. These are simple and proven ways you can take your financial destiny into your own hands.
When prices increase, make certain you have done everything within your power to minimize price increases and the risks associated with those increases. Take a hard look at your money-making and management processes to ensure you’re as efficient as possible. This review should be done annually, at a minimum, or you are leaving money on the table. For example, if gas prices go up make sure you:
• Maximize your route-density to avoid wasting gas.
• Set up a business account with negotiated lower per gallon prices at a local gas station.
• Use credit cards or loyalty programs to obtain discounts.
• Take advantage of purchase-saving programs offered by your professional association memberships.
If you have leveraged everything you can, and the increased gas price is affecting your bottom line, do not be afraid to raise your prices. Send a notice to your customers explaining the reason, amount and timing of the increase. Make certain your communications are timely and transparent.
Follow this same plan for increases in items like insurances and equipment. You’ve got more negotiating power that you know. Less than 10% of companies meet annually with their business partners to negotiate better pricing, terms, delivery, loyalty rewards and co-marketing opportunities. Your partners want you to remain a customer, so they expect these negotiations.
Finally, take a hard look at your compensation model, as it is one of the largest expenses you have. Most people are terrified to change and discuss compensation with their team, but how and when you compensate are key strategic decisions that create a competitive advantage. You can energize your existing team and attract top talent while maximizing your bottom line. Take these fool-proof steps to lay the foundation and pathway for sustainable growth.
Judith M. Guido is the chairwoman and founder of Guido & Associates, a business management consulting firm in the erosion control and green industry. Guido can be reached at 818.800.0135 or judy@guidoassoc.com.
