by Greg Caruso | Aug 12, 2024 | Exit Planning Business Valuation & Growing Business Value
Review processes with your staff.
Often, they know of things that are duplicative or no longer necessary.
Remember that software upgrade that improved efficiency?
Did you really rework your process to take advantage of the efficiency. Perhaps you no longer need that routine sign-off or other changes. Check all of these areas.
Check if you really need all your software subscriptions.
Those things just don’t let go and the costs can add up across staff.
Negotiate anything worth the time.
Obtain three bids. While usually this seems like extra work it often can reduce costs signficinatly. We once reduced insurance costs 50% which was a very material number.
Look at your management structure.
Do you have a layer or layers that really are not necessary? Can these people do some production or sales along with management?
Training.
While training in the short term is an expense in the long term it allows your staff to be more efficent and do higher level things. For many companies well trained staff is the key to efficent growth. Do you have a plan for each person? How are you training and advancing your people?
Capital Costs.
There is a reason CNC machines replaced saws and drills. You do not want to overinvest, but at some point equipment needs to be added or updated to be competative. If you have a lot of equipment, you should have a replacement schedule as a guide that highlights when to review each piece and what is needed in the future for your budgets.
Develop a planning process.
These things should be part of a planning process that includes KPI’s, projections, training and capital investments, and is monitored at least monthly at each level of the company.
by Greg Caruso | Jul 10, 2024 | Exit Planning Business Valuation & Growing Business Value
Have you ever worn rose colored glasses? At first, everything is pink. Weirdly pink. But then you get used to it, and it seems normal. Kind of like, “It’s just the way it is, the way things work.”
Rose colored glasses are a filter for our eyes. We also have filters for our ears. Maybe not as obvious, but filters just the same. Science has proven we all have a way of hearing what we want. Hearing what we already agree with. Hearing what supports our views.
Most of the time this works well. It’s why we do it.
Yet, if we know something is not working, and we want or need change – then our filters can get in the way. Just like seeing pink becomes normal with rose colored glasses, we hear what we want to hear. Rarely is that change. But there are ways, with a little concentration, to take the filters off – just like removing the rose glasses.
Steps to listening (It helps to prepare!)
- Remind yourself that things are not what you think
- Remember, you are trying to hear new ideas. Open your mind to the fact that there are unlimited possibilities (I know some of you are fighting this thought already).
- Clear your “view” – rose colored glasses
- Take thirty seconds and try to quiet your mind (you never will, but the exercise is good for you). Then slowly breath in and out three times.
- Quiet the voice in your head
- Just listen. The little voice is going to speak but relax and minimize it until later. You will have plenty of time to dissect the message later. You only have this present moment to really hear what is being said.
- Be aware of your unspoken needs, body language and perception
- Pay attention. Nod, agree where you might. Ask for clarifications if you really don’t understand (not to prove your point) and at appropriate times repeat what was said in your words to be sure you really heard it the way it was intended.
- Search for the meaning and the commitment behind the message.
- Remember, what is being said is with the intent of helping. It is that person’s experiences and wisdom. Don’t pick at the words but try to understand the meaning.
- Speak your concerns.
- Bring up legitimate concerns to better understand what is being said, not to impede. This is not a debate. It is an opportunity for you to learn something new and see things from a different perspective.
- Do not be thinking of your next question or example.
- Again, just listen. You have time to work on your next question when they are through speaking. Breaks in complex conversations are normal.
Try this. It can be exasperating and freeing. You also might find solutions to your seemingly intractable problems.
by Greg Caruso | Jun 17, 2024 | Exit Planning Business Valuation & Growing Business Value
At the highest level, business value is simple. The formula is:
Business value = Forecast Future Cash Flow / Risk
In business valuation risk is the likelihood of achieving the forecasted cash flow in the future.
Risks come from many angles and chip away at profitability and value.
Here are a few risks, but certainly not all risks:
Payment Risk – Many businesses extend large amounts of credit and don’t always monitor changes in client credit risk over time. Manage accounts receivable and be careful with credit.
Interest Rate Risk – Everyone remembers this one now!
Liquidity Risk – Cash is like blood to your body. Even a profitable business can run out of cash. Manage cash daily or weekly depending on your balances.
Market Risk – It has been a good economy, so long leaders are forgetting about what a recession is really like. If you are in a cyclical industry review plans for when the party stops and sales drop by 20%, 40% or whatever happens in your industry.
Regulatory Risk – This can be a wildcard for many businesses and often understated until a problem arises.
Supply Chain Risk and HR Risk – These both were under-appreciated until Covid. Do you have alternatives if your key people leave, or primary supplier has problems?
Emerging Risks – It’s your guess about what is next. Review and do your best to get it right.
Appropriate risks should be reviewed and systems implemented at each level of your organization. For instance, in construction, weekly safety talks are given by many companies. These are most successful when the conversation goes two ways. Often staff will understand their day-to-day problems and risks better than management.
by Greg Caruso | May 16, 2024 | Exit Planning Business Valuation & Growing Business Value
In the fast-paced world of business, productivity is queen and king. Overall, improving productivity is not just about doing more work; it’s about working smarter, achieving better results, and creating value for all stakeholders involved—employees, customers, shareholders, and society at large.
Just a few of the many places improved Productivity will show up.
Adaptability and Resilience: In times of economic uncertainty or market volatility, businesses with high productivity are better equipped to weather challenges and adapt to changing conditions. They can pivot quickly, reallocate resources, and seize new opportunities, maintaining stability and resilience in the face of adversity.
Employee Engagement: When employees feel that their work is meaningful and their contributions are valued, they are more engaged and motivated. Improving productivity can create a positive work environment where employees feel empowered, supported, and recognized for their efforts.
Cost Efficiency: (Of course!) Increased productivity allows businesses to achieve more with fewer resources, which can lead to cost savings. By optimizing processes and reducing waste, organizations can improve their bottom line and profitability.
Investing in Productivity: A Smart Move
Boosting company productivity isn’t just about working harder; it’s about working smarter. Here are some ways to achieve this:
- Proactive Planning to anticipate growth. Analyze your current capacity and identify potential bottlenecks. Invest in additional resources like equipment, personnel, or training programs in advance.
- Prioritization and Scaling by focusing on core tasks that directly impact sales and customer satisfaction. Consider outsourcing non-critical functions to free up internal resources.
- Invest in the right tools and technologies to streamline workflows and automate tasks.
- Prioritize employee well-being through flexible work arrangements and a positive company culture to reduce stress and burnout.
- Implement clear communication channels to ensure everyone is informed and aligned with goals.
- Track key performance indicators (KPIs) to identify areas for improvement and measure the impact of productivity initiatives on conversion rates.
A productive company is an efficient company. By focusing on employee well-being, streamlined processes, and clear communication, you can unlock the hidden multiplier of productivity and watch your company results and business value soar.
by Greg Caruso | Apr 18, 2024 | Exit Planning Business Valuation & Growing Business Value
A great customer for a business is typically one who brings long-term value and positive contributions to the company. They appreciate the value you bring, the quality you pour into your work, and the passion that fuels your hustle.
Here’s what makes a customer a true soul mate for your business:
- They offer a High Lifetime Value (LTV).
Loyalty runs deep. They’re not swayed by every shiny new thing. You provide them with good advice, the best products for the money, and what might be coming next. They appreciate what you offer and generate substantial revenue over the course of their relationship with the business. They also become your biggest advocates, spreading the word about your brilliance.
- They pay on time.
For businesses that provide products or services on credit, a great customer ensures timely payments. This contributes to the financial health and stability of your business.
- They tell everyone great things about you.
Great customers refer new clients to the business. This word-of-mouth marketing is powerful and often results in acquiring new customers at a lower acquisition cost.
- They’re on the adventure with you.
They’re excited to see you grow and evolve, embracing new ideas and supporting you as you navigate the ever-changing business landscape.
- They respect you.
A great customer engages in ethical business practices and respects the terms and conditions set by the company. Ethical behavior contributes to a positive and sustainable business relationship.
- They understand your purpose.
They get why you do what you do. They recognize the quality of products or services you provide and are willing to pay a premium for that value.
- They know how to communicate with you.
They’re open and honest, letting you know what they love and offering constructive feedback when needed. Two-way communication is the foundation of a strong relationship!
- Finding these customer soul mates doesn’t happen overnight. It takes fostering a connection, building trust, and showing genuine appreciation for their presence. But when you find them, hold onto them tight! They’ll make your business more predictable, life easier, and become a driving force behind your success story.
Finding these customer soul mates doesn’t happen overnight. It takes fostering a connection, building trust, and showing genuine appreciation for their presence. But when you find them, hold onto them tight! They’ll make your business more predictable, life easier, and become a driving force behind your success story.
by Greg Caruso | Mar 26, 2024 | Exit Planning Business Valuation & Growing Business Value
Airline pricing strategies are complex and dynamic, influenced by a variety of factors such as demand, competition, operational costs, and historical customer behavior. Airlines employ several pricing strategies to optimize revenue and stay competitive in the industry.
Some common airline pricing strategies
Yield Management: Yield management is a strategy where airlines optimize revenue by managing the allocation of their finite capacity. This involves adjusting prices dynamically to balance demand and capacity, ensuring that the most profitable mix of passengers is accommodated on each flight.
Segmentation: Airlines segment their market based on factors such as class of service, time of booking, and flexibility of travel dates. This enables them to offer different prices to different customer segments. For example, business travelers might pay higher prices for the flexibility of last-minute changes, while leisure travelers may receive discounts for booking well in advance.
Bundling and Unbundling: Airlines often use bundling strategies, combining services like baggage, seat selection, and meals into a single package at a discounted price. Conversely, some airlines employ unbundling, offering a base fare and charging additional fees for services that were traditionally included, allowing passengers to choose and pay only for the services they need.
Discounting and Promotions: Airlines frequently offer discounts and promotions to stimulate demand during specific periods, such as off-peak seasons or to celebrate special occasions. These promotions may include limited-time sales, discounted group fares, or loyalty program benefits.
Competitive Pricing: Airlines closely monitor the pricing strategies of their competitors and adjust their own prices to remain competitive. This can involve matching or undercutting competitors’ fares to attract price-sensitive customers.
Seasonal Pricing: Airlines adjust their prices based on seasonal demand fluctuations. For example, ticket prices might be higher during peak travel seasons or holidays, while lower prices are offered during off-peak periods to stimulate demand.
These strategies are often combined and adjusted based on real-time market conditions, making airline pricing a dynamic and data-driven process. Airlines continually analyze and refine their pricing strategies to optimize revenue and adapt to changes in the competitive landscape.
How you might use dynamic pricing in your business model
What do you hope to achieve with dynamic pricing? Is it to increase revenue, optimize inventory, or cater to different customer segments? Knowing your goals will help you determine the best approach.
- Establish clear guidelines for how prices will be adjusted.
This could involve setting price ranges, thresholds for demand shifts, or algorithms to automate price changes.
- Leverage data and analytics.
Data is key to successful dynamic pricing. Use sales data, customer behavior patterns, and competitor insights to inform your pricing decisions.
- Be transparent with customers.
Clearly communicate how your pricing works. Customers appreciate understanding when and why prices might change.
- Monitor and adapt.
Dynamic pricing is an ongoing process. Regularly monitor its effectiveness and adjust as needed based on market conditions and customer feedback.
Remember, dynamic pricing can be a powerful tool, but it’s crucial to implement it strategically and with customer satisfaction in mind.
