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“Turnarounds always seem to come down to two things, increasing sales and cash management.” This is from a good friend of mine, Gene Pepper of Glendale, CA. For decades Gene has helped businesses turnaround, grow and be more successful.

 That got me thinking, so I reviewed my current list of clients whose goal is to grow and improve their company. Gene is right, 100% of these clients need to increase sales and manage cash better.

 Could it be a coincidence? I randomly checked 20 turnaround/improvement clients and found: 

1. 90% needed to dramatically increase sales
2. 75% had cash management or accounting problems
3. 50% had marketing deficiencies
4. All had at least one of the top two situations

 Then I surveyed an equal number of companies not in trouble. In other words, successful companies who easily paid their bills every month.

 None of these companies are desperate to increase sales, they have accounting and cash management systems in place and while marketing may not be their strong suit, it is not tremendously lacking.

 Increasing sales

 All companies strive to increase sales. Mature, profitable firms seek a manageable rate of growth. Growth that will allow them to utilize their systems and processes, maintain customer service at a high level and not exceed working capital capacity.

 Struggling businesses need a much faster sales rate. The owner and the employees often put in more time on sales and marketing than they would like to, are unfocused and they usually aren’t very good at it. Once they implement a focused sales plan they see positive results. Eventually the company grows to where it can afford a dedicated sales force.

Marketing

 Marketing and sales are connected. Too many people think marketing is the same as advertising. Actually, advertising is one form of marketing. Marketing is everything you do to shine a light on your business and give people an opportunity to know who you are and what value you provide.

 To increase revenues, you must create and follow a sales and marketing plan.  A major mistake is the lack of research done before taking action. To be successful a business must identify prospects, define why the prospect will want to become a customer and be able to demonstrate the value the customer receives. And it doesn’t have to take a lot of money. Books like “The Secrets of Word of Mouth Marketing” (George Silverman, AMACOM or www.mnav.com) provide hundreds of aggressive, low cost ideas and strategies.

 Cash Management

 I recently read that reducing expenses was more important than increasing sales in a troubled business. In the short-term yes, that’s true. Every company has some fat and it’s often the best place to find cash. I suggested a client analyze every expense category. The amount they spent for “unnecessary” items amazed her. Companies with inventory often find they have too much. And this is money they can use to pay bills, increase marketing or hire that much needed sales person.

 Cash problems can stem from the lack of a good accounting system. Of the 20 “troubled” companies over two-thirds of them did not have a system that produced usable reports. Buy usable I mean the reports provide the necessary up-to-date information:

 ·   To know where the company currently stands

·   For realistic budgets and projections

·   For meaningful break-even analysis to aid the decision making process

 In conclusion, Gene is right. The top problems troubled companies have are inadequate sales and poor cash management. A close runner up is excessive expenses, although this is a quicker fix. If your company isn’t where you want it to be, take a close look at these factors. An increase to the top line and usable financial information are big steps to success.

© Copyright John Martinka 2001. All rights reserved.