Regardless of the reason, the money vaults have shut for now. Whether you’re a consumer play, a business play, or a Linux play, if you’re not the proven leader in your niche, with real cash flow and profits besides, you’re probably going to have to make a profit with the cash at hand.
So this is not the time to hire marketing wizards and make some 30-second spots. It’s not the time to bring in 20-something propeller heads to deliver “cool” new features for your site.
No, it’s time to open that drawer you hate and dust off the bean counters.
I’m referring first here to accountants, but also to anyone else who can examine your operations and squeeze a little more profit from them. As the late Everett Dirksen once said, a million here and a million there and pretty soon you’re talking about real money.
For instance, do you know what your gross margin is? Do you know what your net margin is? Do you know what your EBITDA is?
When you get an order, do you know what it costs to pick, pack and ship it? Do you know what it costs you to warehouse your goods, and ship them into that warehouse?
Do you know your credit risks? Can you cut charge backs from bad customers? Can you use your cash to get better terms from regular suppliers?
In other words, when was the last time you took a hard look at your operations, asking whether you can shave a bit off costs without damaging efficiency, or improve efficiency without adding much to costs?
These are the kinds of questions good bean counters ask. They’re known for killing employee perks, but that’s the lazy way to do things. (If cutting perks is the first answer your bean counter gives you, you’re either incredibly efficient or you need a new bean counter.)
I like this topic because in the years just before the web was spun, part of my job involved covering the great new technologies changing the distribution and warehousing businesses.
Handheld terminals, bar code readers and networks were bringing factories and buyers closer together. I learned, for instance, that net warehouse space in the U.S. hadn’t changed in a decade, despite the growth in the 1980s.
Have you implemented this stuff? If you are outsourcing your warehousing and shipping, has your outsourcer implemented it?
There are also many ways to use the Net to cut your costs. Have you investigated B2B markets to cut procurement costs? Have you truly examined the efficiency of your marketing effort?
This is not easy, and it’s not fun. But when the money window closes, your ability to do these things will determine whether your business lives or dies. A “shake-out” (and that’s what closed money vaults cause) can be a great thing think of it as evolution in action. Many in this herd are about to be culled. If you don’t want to be one of them you need a good bean counter.