In times of crisis it is natural for SMEs to withdraw their expenses and investments and implement savings measures.
On the other hand, it often happens that necessity leads companies to search for efficiency, which could be the positive aspect of these situations.
These moments of lower operational load can be used to stop and analyze the efficiency of the processes that are being applied, issues for which there is generally no time in “fat times”.
This type of evaluation should include several factors such as level of expenses, increase or decrease in sales, quality of service, efficiency in internal processes, etc.
It would be ideal to take advantage of these circumstances to begin this type of evaluation and implement the necessary tools that will later be translate into good practices for the company.
An action that usually triggers this type of period is hiring stagnation of personnel and, sometimes, in the subsequent dismissal of collaborators.
Such was the thinking of Raúl, owner of a furniture factory located in Almagro, who made the decision to get rid of part of the administrative staff with the aim of reducing costs.
Is habitual that SME owners think: “I can do this, I can start taking on more company tasks”, etc.
The result was that the sales fell further Even so, since the commercial driving force of the company had always been Raúl himself, who suddenly had to dedicate part of his time to an additional operational burden.
You have to be very careful with these types of decisions and not forget that the Entrepreneur's time is worth a lot, has a very high opportunity cost.
It is essential that don't abandon his dedication to strategizing of the company for dedicating themselves to operational tasks.
Here the clear recommendation is to carry out a deep analysis of the situation and evaluate where costs can really be reduced efficiently, without deteriorating strategic aspects.
For this it is essential to try simplify the processess, make them simpler and simpler. Not only to reduce expenses but also those superfluous ones that do not generate added value to the final product, increasing its costs, and as a consequence, its prices.
This means reduce bureaucratic processes as much as possible internal processes that, ultimately, use time and resources that do not translate into advantages or benefits for the consumer.
This is something that should always be kept in mind, but especially in times when consumption is in decline and the consumer makes a much deeper evaluation about what to invest their money in and at what price.
All this happens in an ideal case. But the truth is that in many cases, in the"despair", processes or part of them are shortened, which actually generate value in the product or service that is marketed, resulting in a deterioration in quality.
In this regard, the recommendation again consists of arrive at a diagnosis of the company's situation that will give us the guideline of how and where to carry out an effective cost reduction, without altering the quality of the service and the product.
On the other hand, there is the contraction in investing in advertising and marketing of the companies. Nowadays we have many tools that allow us to manage the relationship with clients, without having to invest too much.
That is why it is important to allocate economic resources more efficiently, without abandoning commercial management, which is precisely essential at times when consumption declines.
The implementation and use of social networks, mailing, direct marketing, surveys, etc., are very effective and economical tools to establish fluid contact between companies and their clients.
It is essential to clearly identify the user profile of our product or service to then execute more effective actions.
At the same time, in relation to commercial management, it is extremely useful to have monitoring boards customer satisfaction, customer rotation, periodic contacts, etc.
Sell better and not just more
The desperation to sell more It is also a characteristic situation in times of crisis and market contraction, although it is not a concept directly associated with an adjustment.
It is common to see entrepreneurs desperately trying to increase sales as if to counteract the decline in results.
The truth is that the focus should be placed in the performance optimization of the companies, paying special attention to leveraging the product segment and the customer segment that represent the greatest performance for the company. “Sell better”, not “sell more”.
One has to identify, of all the business units or products offered, which ones are generate better results and put “the energy there”. That is, allocate the greatest amount of resources to leverage the most profitable within the company.
The same happens to identify customer types: There is always a group to which it is advisable to dedicate special attention. This was the case of Gustavo, owner of a company that distributes supplies for the cosmetics industry, who approached us when he noticed a drop in profitability, despite maintaining the same level of billing.
We specially designed a commercial management dashboard that allowed us to detect where the problem was occurring: within the product mix, it was migrating to one with a lower margin, which had a notable impact on the company's real results.
This detection allowed us to implement immediate commercial actions to modify the situation and also the implementation of the appropriate tools to modify immediate course and power sustain it in the future.
In this same sense, I mention the case of Héctor, founder and leader of a food company that, without a doubt, is making a strong presence in the market.
One of the most controversial issues within his company was the coordination between the Sales sector and the Warehouse-Logistics sector. Sales planned deliveries that could never be met, either because Depósito put together the orders poorly, or because deliveries were delayed.
This resulted in complaints and claims of customers, returns, and re-work of the entire chain.
Thus, Héctor ended getting involved in the entire chain, asking what had happened to such an order and why it had not been delivered correctly. He tried to solve each case individually, looking for those responsible and maintaining: “If I am not here, no one will do anything and the ship will sink!”
To find the solution, we turn to the management boards. We noticed that there were many very small orders, which generated a lot of work, mixed among the important large volume ones.
They were being too flexible with the minimum quantity, even though the company's customers were wholesalers.
Under the motto “we want to leave the customer happy”, all types of orders were accepted and, ultimately, it was finished. neglecting all customers.
In conclusion, this was not a problem of process, but of business strategy, which needed to increase minimum order volumes.
In this sense, it is necessary to review the commercial strategy to maintain profitability and sometimes, precisely, the fact of wanting to satisfy all customers and sell more is detrimental to the real results of the company.
We must also consider the issue of inventories, which cause two opposing situations: In some cases, the lack of liquidity of companies, market uncertainty and the decline in sales generate the decision to reduce the stock of many companies.
In other cases, on the contrary, the inflation detonates and increase in inventory of some companies due to the constant increase in their replacement costs. This depends largely on the financial capacity of the company, the characteristics of the products (perishable, seasonal, etc.), storage capacity, etc.
It must always be remembered that the stock translates into immobilized capital, occupied space, handling costs, risks of breakage, etc., so that, in each case, the advantages and disadvantages of increasing or decreasing inventory must be analyzed.
Whether in times of crisis or prosperity, it is always advisable to understand the importance of efficiency within the company.
It is essential to have clear work processes, structured and defined roles, and constant monitoring through dashboards that allow us to understand where the business is leveraged and its possibility of adaptation to changing times.
However, the pressure to “become more effective” It is highlighted in times of crisis, further increasing the importance of understanding these issues.
