How to Survive & Thrive Steps to Succeed During Recession

How to Survive & Thrive
Steps to Succeed During Recession
H & R Fabrics
1118 North 35th Ave.
Phoenix, Arizona 85009
Tel. (602) 269-6131
www.handrfabrics.com
February 19, 2009
16420 E. Bainbridge Ave.
Fountain Hills, AZ 85268
Tel. (602) 908-1082
info@BlackerbyAssoc.com
www.BlackerbyAssoc.com
The guy who fell onto
an upholstery machine
was fully recovered.
© 2009 Blackerby Associates, Inc. All Rights Reserved.
Phillip Blackerby, M.P.Aff.
Tel 602-908-1082 z Fax 480-837-6608
Phillip@BlackerbyAssoc.com
www.BlackerbyAssoc.com
twitter: @pblackerby
www.linkedin.com/in/pblackerby
Phillip Blackerby is an economist and consultant to small businesses. Specialty practice areas
include: business planning; efficiency improvement using lean practices; public sector strategic
planning and grant-writing.
Mr. Blackerby has trained hundreds of managers in business planning,
strategic planning and related topics, facilitated dozens of strategic planning processes and published several articles. He has negotiated banking
relationships, managed an e-business, lobbied legislatures, analyzed
financial markets and improved cost-accounting.
Mr. Blackerby was Arizona’s lead project manager, and managed the
Lean Enterprise and Professional Business Advisor product lines for the
National Institute of Standards & Technology, Manufacturing Extension
Partnership. He developed the FastTrac Manufacturing program, published four volumes of manufacturing improvement case studies and
evaluated assessment systems and advanced technology grant applications.
Mr. Blackerby is a member of the Arizona Technology Council, and serves as Vice-Chair of its
Public Policy Committee. He is a certified FastTrac business plan instructor, executive coach
and trainer (CCUI). He was Associate Deputy Treasurer of Texas, budget director for the Texas
Comptroller and management auditor for the U.S. Government Accountability Office. Mr.
Blackerby earned a master’s degree from The University of Texas at Austin, and a bachelor’s
degree from Brown University, Providence.
Recession Goals
n Survive:
CIK
DROOM
o Thrive:
Position for ‘New Normal’
Invest in innovation
Invest in reinvention
Buy or bury competitors
© 2009 Blackerby Associates, Inc. All Rights Reserved.
-1-
‘New Normal’
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High energy costs
Declining to steady prices
High unemployment
Credit: moderate rates; high
risk; tight: focus on assets,
cash flow, FICO score
Reluctant buyers, consumers
Harsh business relations
Real estate sector down
All things ‘green’ up
© 2009 Blackerby Associates, Inc. All Rights Reserved.
-2-
Tools: Balance Sheet As of: _/_/_
Assets
+ Cash
+ Accounts receivable
+ Other short term
+ Inventory
+ Plant & equipment
+ Other long term
= Total Assets
A
=
Liabilities
+ Accounts payable
+ Short term debts
+ Long term debts
= Total Liabilities
Equity
+ Investors’ capital
+ Retained earnings
= Total Equity
L+E
= Liabilities + Equity
© 2009 Blackerby Associates, Inc. All Rights Reserved.
-3-
Tools: P&L, Cash Flow
Income Statement
+
=
=
Cash Flow Statement
Gross Sales
± Sources and uses of
cash due to operations
± Sources and uses of
cash due to financing
± Sources and uses of
cash due to investing
+ Beginning cash
= Ending cash
COGS/COSS
Gross Profit
Selling Expenses
General Expenses
Administrative Expenses
Operating Profit (EBITDA)
© 2009 Blackerby Associates, Inc. All Rights Reserved.
From: _/_/_
To: _/_/_
-4-
Balance Sheet - Survive
Reduce Non-Cash Assets, Increase Cash
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Collect collectable receivables
Sell questionable receivables
Require cash on delivery
Require deposit on contract
Sell & lease-back equipment
Lease capital equipment
Put off capital purchases
Buy used equipment
Rent-out excess facilities
© 2009 Blackerby Associates, Inc. All Rights Reserved.
-5-
Balance Sheet - Survive
Renegotiate Liabilities
z Renegotiate rent:
extend term?
z Consider executive suite
z Delay paying vendors
until due date
z Ask for discount:
prompt payment; cash
z Ask vendors to hold checks
© 2009 Blackerby Associates, Inc. All Rights Reserved.
-6-
Balance Sheet - Thrive
n Manage and o Minimize Inventory
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Money: 8-14% interest on capital
Loss: lost; ‘shrinkage’
Material change: age; rust; temper
Obsolescence: design; technology
Quality: dirt; scrap; scratch; spoil
Safety: tripping; injuries; lost time
Space: $8-$20/sq.ft./yr.
Transactions: in/out; rummage
Inventory Adds Cost, Not Value • ‘Inventory is evil’
© 2009 Blackerby Associates, Inc. All Rights Reserved.
-7-
Income Statement - Survive
Increase Revenues
z More focused selling activities: sales calls,
customer service calls, cross-selling
z Government sales: 8(a), SBIR
www.ccr.gov; www.sba.gov
z Strategic partnerships: ‘What noncompetitor accesses the same market?’
z Adjust pricing to changing market
z Diversify products, lines: go ‘Green;’
www.greenbiz.com
z Reduce SKUs based on profitability
© 2009 Blackerby Associates, Inc. All Rights Reserved.
-8-
Income Statement - Thrive
Increase Effective Marketing
z Web 2.0: Build trust; be expert
eCommerce: Open markets
Customer order entry
Testimonials/complaints
Optimize search
Email list management
Blog/podcast: Yours & others’
Social networks
Twitter
z PR: editorial content; create ‘hook’
z Signage: ‘A business with no sign…’
© 2009 Blackerby Associates, Inc. All Rights Reserved.
-9-
Income Statement - Thrive
Increase Productivity: Cut COGS/COSS
z Automate
z Adopt new applications, some free
www.google.com/intl/en/options
www.jumpbox.com; www.download.com
z Don’t fear the ‘cloud’ (SAAS)
z Go paperless
z Eliminate fax machine, phone, paper, toner
www.efax.com
z Shop credit card merchant services
z Map, improve processes
© 2009 Blackerby Associates, Inc. All Rights Reserved.
- 10 -
Income Statement - Thrive
Increase Productivity Through Training
z Free programs
z Webinars
z FastTrac® Program: Tempe, Gilbert
www.blackerbyassoc.com/fasttrac
z Arizona Job Training Program
www.azcommerce.com/Workforce/JobTraining
© 2009 Blackerby Associates, Inc. All Rights Reserved.
- 11 -
Income Statement - Thrive
Increase Productivity: Map, Improve Processes
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MRP
Map processes to see them
Identify value-added, NVA
Identify problem areas
Innovate solutions
Rank priorities
Plan changes
Make changes
Start over
© 2009 Blackerby Associates, Inc. All Rights Reserved.
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Income Statement - Survive
Decrease SG&A Expenses
z Focus on core functions: operations,
strategy, money, customer service, sales…
z Outsource: accounting, bookkeeping, HR
(PEO), legal, marketing, reception, selling…
z Barter, negotiate professional fees
z Drive 30% smarter: hi-MPG vehicle, weight
speed, cruise, air filter, tire pressure…
z Reduce carbon footprint: bulbs; cartridges;
commuting; equipment; lights; mileage;
recycle; sensors; thermostat; travel…
www.greenbiz.com
© 2009 Blackerby Associates, Inc. All Rights Reserved.
- 13 -
Income Statement - Survive
Decrease SG&A Expenses (Cont)
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Smart supply chain: JIT, quality
Reduce trips: buy weekly, monthly
Ship smart: FEDEX, UPS web; join; 2-day
Barter: www.premierbarter.com; www.nate.org
Telecom: land lines; Skype; cell plan
Insurance: raise deductible; trade assns:
www.asba.com
z 1-800-GOOG-411: free dir. asst., no ads
z Take over maintenance
© 2009 Blackerby Associates, Inc. All Rights Reserved.
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Income Statement - Survive
Cut Employees When Necessary
z It’s not about those cut; it’s about the
company and those who stay
z Guy Kawasaki, The Art of the Layoff:
blog.guykawasaki.com/2006/07/the_art_of_the_.html
z Communicate! Explain conditions,
strategy, vision, value of those staying
z Use temps, interns to level workloads
z Don’t fear unemployment tax; $7,000 base
z Sub-lease unused space: strategic partner
© 2009 Blackerby Associates, Inc. All Rights Reserved.
- 15 -
Cash Flow Statement - Survive
Sources and Uses Due to Financing
z Renegotiate loan rates
z Renegotiate credit card rates
z Apply for a line of credit:
Business assets
Business cash flow
Personal guarantee
Personal FICO score
z Shop for merchant fees
© 2009 Blackerby Associates, Inc. All Rights Reserved.
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Cash Flow Statement - Thrive
Sources and Uses Due to Investing
z Invest in new product lines:
Higher profitability
‘Green’ product lines
z Invest in things ‘Green:’
USGBC LEED Building Certification
www.usgbc.org/DisplayPage.aspx?CategoryID=19
LEED Accredited Professional
REGREEN: Residential
Remodeling Guidelines
Avoid ‘greenwashing’
© 2009 Blackerby Associates, Inc. All Rights Reserved.
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Cash Flow Statement - Thrive
Sources and Uses Due to Investing
z Angel Investment Tax Credit
www.azcommerce.com/BusAsst/Incentives/Small+Business
+Capital+Investment+Tax+Credit+Program.htm
z Research & Development Tax Credit
www.azcommerce.com/BusAsst/Incentives/RD+Income
+Tax+Credit.htm
© 2009 Blackerby Associates, Inc. All Rights Reserved.
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Recession Goals
n Survive
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o Thrive
Convert assets to cash
Defer capital purchases
Renegotiate liabilities
Delay paying bills
Increase selling activities
Shop merchant services
Outsource support
Reduce carbon footprint
Buy smarter
Cut employees
Renegotiate credit rates
© 2009 Blackerby Associates, Inc. All Rights Reserved.
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Manage, reduce inventory
Add new, ‘Green’ products
Cut low-profit products
Marketing: web 2.0; PR
Automate for productivity
Paperless systems
Train for productivity
Map, improve processes
Invest in everything Green
Apply for Line of Credit
Invest in R&D