The new financial year begins with falling stock markets at half the levels of the previous year, rising levels of unemployment, massive ponzi schemes, liquidation of MIS companies, huge mergers and acquisitions of failing companies and extended demands for forward planning by lenders.
It is going to get tough for small and medium businesses to get new orders in this credit environment where consumers are going to be spending more at home and expecting even more assurance of superior delivery of promised benefits as they cut back on incidental expenditures.
Customers are going to be shopping around, seeking best buys and delaying signing up new contracts outside of the new home and household sectors. Lenders are going to want more time and offer less credit on the basis of assurances of growth prospects – unless they are backed up with a forward order book.
In this climate, small and medium enterprises must be prepared for considerable pressure to not only cut costs but to make major corrections in the way that they do business. Expect to be asked for smaller orders, delayed orders, faster response times and requests to carry more of the costs of packaging and promotion to end customers. The bad news from lagging indicators such as employment will get the headlines rather than the continued upward trend of consumer confidence graphs as a forward indicator.
Smart companies will follow the positive path by building new customer inventories at the same time as they review their business procedures, focus their offers and ensure that word of mouth and testimonials on the new media build longer term productivity and profitability. As Drucker has said, the business of business is the creation of customers. Now is the time for the top team to bring everyone together to talk about business building and marketing strategies, focus on the Christmas sales period and plan for a profitable and employed new year.
Staff who are taking orders need to be trained to handle increasing frustration, unjustified criticism and unreasonable demands. Order clerks and those who are fulfilling orders will need to be reminded of quality assurance provisions and the need to go the extra mile in checking that the final customer expectations have been met, rather than trying to squeeze a little more profit out of a deal. It is no use blaming the last year’s downturn for rude and recalcitrant staff that resent the pay freeze and take it out on the people who seek their services.
Recently a colleague ordered new air-conditioning and electronics for the family home. A ‘great deal’ was offered as a bundled service bringing together a number of sub-contracted suppliers to put the package together. Customer satisfaction plummeted when it was found that the subbies either played with time schedules, failed to meet commitments or created ‘added costs’ such as charging for checking the installation.
Complaints to the packaging supplier were referred back to the rapidly disappearing sub contractors who passed the blame.
The hot tip for the first half of this financial year is to close the newspaper and open new relationships with downstream distributors by talking through shared marketing initiatives, focussed advertising and benefit promotion, and quality assured service.
Dr Colin Benjamin
Entrepreneurship and Strategic Thinking Consultant
Marshall Place Associates, www.colinbenjamin.net
Marshall Place Associates offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.
Contact: CEO Dr Jane Shelton, Phone +61 3 96400099 Email www.marshall place.com.au
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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