A proactive approach to contingency planning is to conduct annual business tune-ups designed to uncover and identify situations that can be improved in the business. By asking the right questions, issues that need attention will surface. The subsequent actions can be prioritized as short- or long-term solutions.
Case Example: Making Adjustments
A well-established engineering company was recently hit hard by the economic downturn. One of its major projects, a five-star hotel and conference center, lost an important investor and the project completion was in jeopardy. The business owner decided to conduct a midyear review of the business plan and look for opportunities to make adjustments that would lead the business to a successful yearly performance.
Identify Business Strengths. The real strengths of this business are that it has been in business for 23 years and has built a reputation with clients and suppliers that will pay dividends in the future. The geography has growth opportunities. The 30 or so employees of the company are assets and can be tapped to help to find ways to improve the business. A major goal would be to first get their arms around the business, meet with managerial and professional employees, and engage them in the effort of making the business more competitive in the future. This, combined with some tools in place, would be very powerful.
Identify Business Opportunities. After reviewing the day-to-day management processes and systems, there are gaps in use of customer and financial information, the workforce is not being used to its fullest capability, and there is a lack of documented plans to use as measurements. A list of focus areas includes, but is not limited to, the following:
Identify Sources of Funding. Immediately locate a source for a $14 million construction loan. Initiate contact with commercial bankers immediately.
Marketing, Business Development, and Sales Plan. Build a customer file, create a prospect file, and conduct a quick-hitting marketing program to communicate with customers and prospects (option: identify a service). Eliminate peaks and valleys.
Financial Management. Create a quarterly P&L, review credit, collections, and receivables recent history, and look for opportunities to tighten up the process. Communicate financial performance on a quarterly basis.
Full Use of Manpower Capabilities. Find opportunities to fully use staff resources through short-term consulting projects. Use websites such as www.sologig.com to locate opportunities.
Strategic Management and Business Plan. Uncover opportunities to expand services and geographies to drive new business. This will be coupled with the marketing and sales plan.
Efficiency.Use Lean Operations Techniques to find ways to eliminate waste by reducing cost and non-value-added activities.
Exit Strategy.Make the business viable to a third party.
