Taking a hard look at costs
Dear Karen: I’m budgeting for 2009. How do I determine which costs to cut?
Answer: Now is a good time to renegotiate -- or eliminate -- fixed costs. If business slows next year, consider letting the bottom 10% of your workforce go and upgrade the top 90% by increasing pay and giving bonuses where appropriate, said Ken Kamen, president of Mercadien Asset Management in Princeton, N.J.
“As difficult as this may feel in the short term, it’s better to make difficult decisions now, rather than have impossible decisions forced on you with less choice later,” Kamen said.
If you’re running lots of personal expenses through your business, as many small-business owners do, you might be putting the company in jeopardy. “Business owners must recognize that their businesses aren’t there to give them the life they deserve but rather a life they can afford. Simply put, if you’re using your business to augment your lifestyle, it’s time to reexamine your plan,” Kamen said.
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Making meetings more beneficial
Dear Karen: Our employees complain that we have too many meetings, but I think they’re critical for making sure everyone’s on the same page. How can we make our meetings less painful?
Answer: Complaints about meetings have become ubiquitous, particularly with so many employees stretched these days.
It is important to meet with your employees, but consider making meetings shorter. Set an end time and stick to it; open-ended meetings can lead to long-winded and nonproductive discussion.
Hold meetings early in the week and early in the day, when energy and focus levels are high, said David Weiman, a management psychologist in Wynnewood, Pa. Send an agenda in advance that includes times for discussion of each item to provide structure for the meeting. If an issue arises that involves just one or two people, have them continue their discussion after the meeting so the agenda can progress.
“Consider brief individual or small group meetings, short conference calls and gathering information by e-mail as an alternative to traditional staff meetings,” Weiman said.
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How to handle high-need clients
Dear Karen: I have a longtime client who expects special treatment and sometimes annoys my staff. I’d like to cut this client loose but I’m not sure I can afford it. What to do?
Answer: Standard advice says you should stop doing business with high-need clients. But turning down revenue isn’t easy, particularly during tough economic times. Do some calculations and figure out what percentage of your business this client represents and how much revenue you would lose if you stop working for him or her. Then consider how many new clients you’d have to recruit to make up for the lost work, said Bill Bartmann, chief executive of BillionaireU.com.
If this client is too valuable to lose, explain that to your employees and help them brainstorm strategies for dealing with the troublemaker. But if this high-maintenance account is not a top revenue-generator, consider dropping it. The account is probably so time-consuming that it is dragging down your net profit.
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