Maintain The Value Of The Company Through Easy Steps

There is no doubt that economic events have and will still for a long time, an impact on the financial situation of SME’s.

It is seen that this reality every day alongside leader’s companies that have, for the most part, developed strategies to counter uncertainty which weighs on them, or rather on their finances. If some are close to retirement, the economic recession has upset some of their personal projects. Why? Because of the drastic drop in their portfolio of shares and RRSP, or the decrease in the market value of the SMEs, which is often a large part of the private wealth. As a result, much business owners need to keep, some time again, the bar commands of the company to weather the storm that is raging now. If the conditions are not met to increase the value of the company, as many try to maintain the acquis and save the current value of the company. However, all businesses are not affected by the recession in the same way, and can be seen even SMEs that are in progress.

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The companies that stand out for their profitability are often those who take advantage of calm weather to be able to analyze and find opportunities strategies. Responsiveness, coupled with a precise and rigorous management system, to overcome the obstacles related to the vagaries of the economic context. The most talented leaders benefit from this period of difficulty managing all the parameters so as to reinforce the strengths of their business and improve their image among their partners (suppliers, bankers, employees…). It is precisely the ideal time that allows to question certain acquis, make changes, sometimes drastic, in order to ensure the continuity of the company. In this regard, a recent HBR article highlights tips to mitigate the effects of the crisis, but also to find other avenues to increase the profitability of the company. Here are the main points:

• Locate the market shares that would be accessible to the company. Of course, the priority is to retain loyal customers, but particular attention to non-regular customers is also to be taken into account. What are the products or services that would be triggers and them would come within our company? An interesting example is the case of Star buck, who initiated an extension of services by developing the take-away sale counters, but also the command at the wheel.

• Reduce the gap
Between the needs of customers and the company’s offer, In times of crisis, the satisfaction of the customers became the capital so that they go elsewhere. A precise intelligence on the needs of the market allows the company to keep its profitability avoiding over-size its offer (and keep its margins), but also by responding adequately to increasingly demanding expectations.

• Locate unnecessary expenses.
It is precisely the appropriate time where listening to employees is more active to change attitudes, and analyze the positions that can be reduced or even removed. A rigorous management with the establishment of performance indicators to connect more quickly the adequacy of expenditure in relation to the expected returns.

• Establish or improve processes.
The most profitable businesses are those that have developed competitive advantages that allow them to produce more profitably than their competitors. In calm times, especially if the company will be sold in the coming years, the period is ideal for in-depth analysis of the value chain, and enhance sustainability by improving processes (procurement, manufacture, finance…). Reliable and precise measuring elements will all be arguments reassuring when the potential buyer will be interested in taking over the business.

It is betting that the crisis we are currently experiencing will still be in our memories in 5 or 10 years… and that the actions taken today will be concrete evidence of the quality of management of the company. In fact, it is a matter of vision, the difference between the short and the long term, whose value is the result.