25 tips to manage through the slowdown

9. Renegotiate contracts
If you already service and input contracts in place, take a good look at all of them and see whether there is scope for a renegotiation on rates. Can you do with a lower level of service on service contracts? If deployment of manpower is included in these contracts (like manning point-of-sale positions) can you do with fewer people? If sales is down, obviously you can. What about your courier and other delivery mechanisms? Maybe you can do with a slightly longer delivery window. Can increasing the delivery window from, say, three days all-India to five get you a lower rate?

Managed service contracts and annual maintenance contracts are another set that should be up for closer scrutiny. Can the service windows be relaxed to reduce costs?

And while at it, be prepared to renegotiate contracts others have signed with you. Now that you know about it, be prepared beforehand, at least for key clients, with what you can offer and, whereever possible, try and ensure that you do not end up with nasty surprises like the cancellation of a critical order.

10. Can mergers make your business stronger?
Typically we tend to consider a merger as one of our last options. The problem with this approach is that, firstly, we will be negotiating with our backs to the wall, and, more importantly, at a point when the valuation will be at its lowest. So, without being emotional or superstitious about it, it is important that we do not keep this option for the last minute.

Basic questions to have an answer in hand include: Who are the possible suitors? What are they likely to be looking for? How all can a merger improve your business ? Can a part of the business be merged/sold? What level of control of ops are you willing to accede?

What about establishing a few initial contacts with the prospects if you do not already have them?

11. Reduce travel and overnight stay
Travel has just become way more costlier, and airports have moved far away from the city in at least two cities, Hyderabad and Bangalore. What this means is that you are going to be spending more time and money on travel and overnight stay. All the more reason why in tough times such as these you should look at saving on both time and money.

Three tools come to mind immediately that help achieve this objective. Audio conferencing, Web conferencing, and video conferencing. Actually, all three are variations of the same theme – remote conferencing. All telecom service providers have phone bridge services that multiple people can join in at the same time and hold a conference. One person has to setup the conference and others dial into a given number to join the call. Here at DARE, we have tried voice bridges for both national and international voice conferences. Our experience is that this works best for groups of under 10 people if all are expected to be talking. If, however, only one person is going to be talking at any given time, the number of callers logged in can be really large without any problems. Web conferencing as offered by Webex, among others, lets you share your desktop with other participants. This is useful if you have to run a presentation or you have to demonstrate a software application. Web conferencing applications also support text chat. Typically, you combine a Web conference with an audio bridge for best results. Video conferencing is capital intensive to set up afresh, but there are third party networks like the one run by Reliance. The only problem is that you have to move to their Webworld to conduct the video conference. One of the limitations of video conferencing is that it is not easy to interconnect different systems. Which means you cannot easily dial out to clients’ video conferencing system from yours and have a conference. Therefore, if your travel is mostly for client meetings, then video conferencing may not be a cheaper alternative.

And while on the topic of travel and stay, what about sharing rooms?

Sabsebolo is a recently launched free conference service by Yogesh Pate and Sabeer Bhatia. It enables as many as 10 parties to listen to or participate in a conference call you make – for free. Besides this free service, they also provide paid plans and business plans and fax to email service. Binesh Kutty at the DARE blogs

12. Reduce printing and posting costs
If your business involves printing and posting a large volume of bills every month, consider emailing them as PDF. This saves you printer costs, paper costs, electricity and postage costs, not to speak of manpower and time costs. Many banks and telecom service providers today offer both printed and electronic versions of their bills to customers; but may small businesses and single entrepreneur initiatives have gone a step further and completely done away with paper bills. No reason why you should not join them. And while at it, add a line at the bottom to each PDF bill to show your concern for the environment with a message like: “Save the environment; please do not print multiple copies of this bill unless it is absolutely essential .”

On the subject of printing, have you considered reducing the quality of paper that you use for your marketing literature and for bill printing? A small reduction in the quality of paper used – a reduction in grammage or a shift from art paper to normal paper will result in substantial savings while having no effect on your business’ image.

Another point we have already touched upon is whether you really have to use that costly courier? Can a cheaper local courier work out? If you have to absolutely deliver printed material, what about sending electronic documents to your local offices for printing and local delivery instead of printing and couriering from a central office? Savings in courier costs could be significant.

What about documents for internal customers: your employees? Why not save some paper there by putting them up on an intranet? Don’t have one? You can create one for free on Ning. And here is something that most organizations do anyway – recycle ink cartridges.

13. Implement open source software
There is a saying that when times get tough, open source gets going. Why? The logic is simple: IT budgets are amongst the first to get cut and at the same time the pressure from software companies (who have their own huge targets) to license software goes up. The way out? Open source.

How usable is open source? A majority of the Websites in the world run on Apache, an open source software. Tomcat and Jboss are widely used application servers. The DARE Website is implemented on Joomla, another open source software. The emailing system for the Website runs on yet another open source software – PHP List. We use another open source software LimeSurvey . This article is written using OpenOffice.org, an open source office suite. Some of my article concepts are developed using Freemind and open source mind mapper. Some of my basic graphics work is done using Paint.Net. We run our network asset management on SpiceWorks, and use many other open source tools for network monitoring and management.

If you are considering this approach, then there are a few things that you must keep in mind. Open source does not necessarily mean free. There are implementation and maintenance costs that you will have to pay. And many open source software have paid versions that are more feature rich or offer assured support. The biggest cost differential comes in the per-seat licensing fee. Most paid software operate on such a basis. Most open source application software do not either charge a license fee or charge a low fee. That is where your savings actually come from.

14. Reduce telephone costs
Communication costs are never insignificant for any business. If you have a lot of international calling to do, have you checked out Skype phones or services like World Phone that give you cheaper international telephony?

For calls within the country, did you know that you get better rates with closed user groups?

Soruce: http://www.dare.co.in/strategy/business-essentials/25-tips-to-manage-through-the-slowdown/Page-2.htm

25 tips to manage through the slowdown

The Sensex is down to half of what it was six months back. The world’s top investment banks no longer exist, and the US and European governments are rolling out the mother of all financial rescue packages. So, how are you affected? Unless you are in the export or BPO businesses, the slowdown may not yet have manifested in loss of business.

What will first become obvious is delayed payments and delays in signing new deals.

As I write this, the full impact of the financial meltdown is yet to reveal itself, particularly in India. Is it just a a slowdown? Is it a recession? Is the worst over, or will there be further shocks? All these questions are still up in the air. Clearly, we have not seen the end of this. We will have to wait for the next cycle or two of corporate results to assess the full extent of the situation. Meanwhile, how does one tide over these uncertain times? We have put together a list of things to do and to keep a close watch on. Reducing costs is, of course, the most obvious — so much so that it does not merit a mention as a separate item. The question is, where does one reduce costs and how does one go about it? This is what we shall answer in some detail in the following pages.

1. Reassess your business plan
The first thing to do is to completely reassess your businesses plan to figure out where and by how much you will be impacted. Figure out which input costs have gone up and by how much. Which are the target markets in turmoil? How are your key clients affected? By how much will their order position be affected?

Even if you have just finished wrapping up your half-yearly budgets, recast them if you expect dramatic changes. It is absolutely imperative that you understand the extent of impact the current scenario is going to have on your business.

2. Become cash flow and cash positive
With banks freezing working capital loans and lines of credit, it important to manage your cash flow tightly. For this, you first need to have a clear assessment of your potential cash flows. If there are negatives in the monthly cash flow, how do you make it positive? Is there any money you can collect a little faster to improve cash flow during bad months? Which payments can you defer or delay? Which are the clients you need to watch closely in order to ensure that there are no nasty surprises by the month end?

Add potential investors turning coy to banks freezing credit, and you can be out in the deep end if you are a startup or are bleeding. Therefore, an added question is, how fast can you turn cash positive? Do all that you can to turn positive as fast as you can. Here I am talking about operational income and expenses, and not profits, which take into consideration things like depreciation.

3. Manage key clients
Most businesses follow the 80/20 rule when it comes to their clients. Eighty percent of your revenues will come from 20 percent of your clients. Identify this 20 percent. How healthy are they now? Reassess their ability to pay on time. Take them into confidence. Can you help them a bit more in these troubled times without hurting yourselves? Is there some way your business can help them reduce costs and reach markets faster? Can you find a new use for their products or services? In short, do everything you can to not only retain them, but also increase business from them, as getting a new big client is not going to be as easy. On the other hand, ensure that you are amongst the first to know if they are in trouble.

4. Identify expenditure that can be deferred
Identify all non productive and long-gestation-period expenditure, and see which can be deferred. Non-productive expenditure start with small ones like redecorating the office. Capital investments include purchase of new offices or land, setting up new factories, plant and machinery, and so on. Decisions on which capital expenditure is to be deferred will flow from a revised business plan. Another set of capital expenditure that can be deferred is the purchase of computers , which we discuss separately.

5. Convert capital expenditure to monthly payouts: Lease
There are capital items that cannot be deferred as expenditure that is critical to the continuation of business. Can you convert at least some of the new capital expenditure into a monthly payout by going the lease route? Almost everything from plant and machinery to office space to computers to cars and software can be leased today. Using the lease route does away with the need for lumpsum payouts and to that extent reduces the drain on your cash flows, as well as the need to organize new loans. There are organizations that will help you lease anything and everything, and there are those that specialize in specific items.

General purpose leasing firms tend to look only at providing the cash flow for your equipment, while the specialists also take care of maintaining and managing equipment. To give a casual example, India Leasing will organize the finances for purchasing, say, printers and cars, which you have to separately own and maintain, while Black Magic Toners will lease manage and maintain printers, while Leaseplan will do the same with cars.

Have you considered a sale and leaseback option for assets you already own, where you sell these assets to a leasing company and then lease it back yourselves? This will release some cash for short-term needs.

6. Barter
This is something that most businesses do not consider. There is a healthy ecosystem out there for bartering goods and services. You can offer an exchange for goods and services you produce for those you need, including advertisement space. Thus, when you cut down your advertising budget, you can still get advertising space by offering to barter.

Net4barter and Tradex are organisations that will organize a barter for you for a fee. Craigslist, LinkedIn, and other social networking sites are also good places to get barters going.

7. Collect smarter
There is something that one tends to forget in the hurry. With payment schedules being stretched, you will obviously put a lot of focus behind overdue payments. But what about
advances? What about collecting some of the dues before they actually become payable?

One of the techniques that I saw being used during the dotcom slowdown was to offer discounts for payments made in advance and for collections done before due date. Such discount offers made to selected clients or even on selective deals could help in managing during critical cash flow situations.

8. Leverage the Web and mobile
One of the first items you will cut (or defer, if that is the term you prefer) from your budgets will be advertising expenditure. When the total available budget is reduced, you should also take a fresh look at your media mix. And you should take a long hard look at Web-based advertising options.

You may already be doing click-through advertising on Websites. Have you considered leveraging social networks for recruiting employees as well as customers? Have you looked at blogs? What about setting up employee blogs to improve customer touch points (and reduce costs for reaching out to the customer)?

SMS in bulk can be very cheap. Have you considered that as a response mechanism in place of printed letters and phone calls? Have a new deal to advertise? What about using SMS and email to get the word out? Somewhere inside your organization there is a treasure trove of email IDs and cellphone numbers. They are there in visiting card holders, in customer feedback forms, in registration and warranty cards, in emails and printed letters that customers send you, in your investor database, and so on. If you have not done it yet, now is a good time to get all of them organized and put to use.

Soruce: http://www.dare.co.in/strategy/business-essentials/25-tips-to-manage-through-the-slowdown.htm