Yogi Berra, World Series champion and Hall of Fame catcher for the New York Yankees, was known as much for his humorous sayings as he was for his talent. My favorite? “If you don’t know where you’re going, you’ll end up someplace else.” No truer words were ever spoken. Navigating the unknown is much easier when the foundational pieces are in place and there’s a plan for the way forward.
Here are five key actions every business can take to ensure stability, continuous improvement and operational excellence, regardless of which way the market winds blow.
Develop an operating model that allows you to easily pivot when economic or market trends change. Concentrate on growing your recurring revenue services, with labor and equipment inputs adaptable across multiple business segments to provide a competitive and financial advantage. If your capital is tied up in specialized labor, equipment and material, it may reduce your company’s ability to turn on a dime, leaving it vulnerable during times of change, both financially and operationally. Subcontracting services, cross-training employees and renting, rather than purchasing, specialized equipment can help your business improve its agility and make full use of its assets in any situation.
Develop a strategic plan
Make your strategic plan a living document, one that can be tweaked and refined to accommodate the dynamics of growth. It should include several elements — clearly defined goals and objectives for the current year, as well as a longer-term outlook of 3-5 years, plus stretch goals that can be implemented over time. It should include a SWOT analysis — an evaluation of the company’s strengths, weaknesses, opportunities and threats — in conjunction with the stated goals and objectives. The plan should contain an operating budget for the current year, and an estimated budget for several years into the future. Finally, an action plan should be developed detailing the steps necessary to achieve the established goals and objectives, who is responsible for completing them and the timeline for completion.
Know your numbers
Gone are the days when simply looking at an income statement three weeks after the last period closed results in consistent success. Good financial management occurs by actively controlling what is in front of you, not passively observing what is in the rear-view mirror. Work with CFO or a financial advisor to develop a financial dashboard that tracks Key Financial Indicators (KFI), ratios and objectives in a clear and timely format. Regularly review this data and use it to help actively manage sales, financial and operations activity. Lastly, consider the operating budget a dynamic document that you update regularly to reflect changing economic and market conditions.
Actively manage accounts receivable
All too often, receivables management is viewed as an administrative function, receiving scrutiny only when cash flow is suffering. On the contrary, it should be managed weekly as a combined administrative and operations responsibility. For accounts between 30-45 days delinquent, operations’ staff are generally in the best position to collect as payment is often withheld due to a service concern. After 45 days, collection communications, responsibilities and service disruptions may require a coordinated response between operations and administration.
Review, consolidate and integrate operating systems
It is difficult to know what systems are being used, especially with so many apps available at the touch of a button. It is a good bet that your employees have created workarounds and short-cuts to help them do their jobs — an efficiency step that works for them but which may be a cog in the greater wheel of operational performance. Take an inventory of all systems, both formal and informal, determine what is working and what is not, where informational and operational gaps exist, then determine what stays, what goes and what’s needed. Assign and empower employees to step up to lead in their understanding and use of various systems and encourage them to share newly acquired expertise to mentor and train others. Finally, invest in building a systems performance engine by creating a network of integrated systems that work together to maximize effort, reduce redundancies and provide advanced reporting capabilities that assist in timely decision making.
Reprinted with permission. GIE Media. Lawn & Landscape March 2023 (c)