Five Part Program to avoid FirefightingDo you get a buzz out of sorting that crisis?Did you feel a sense of satisfaction when you managed to persuade that customer not to take his business elsewhere? Or that when you ran out of cash, you managed to get the bank to keep open your credit line for just a little longer? How did you get into the mess in the first place? The only way round this is to be systematic. This simple 5 step process may seem obvious, but its strength is in the doing. 1. PEOPLE Know your people and their capabilities. Value their opinions - it's often on the shop floor that the first signs of something going wrong appear - use them as your eyes and ears. This is a win-win scenario - you gain and they feel more involved, because they are. 2. PROCESS & MEASUREMENT Understand how everything works - the sales process, supply chain, ordering, production planning, how the work flows through the factory if you have one, how the money is paid. Then measure. Every week, you should know how many sales, due when. What raw materials, by when. How many orders processed per person, and so on. Go for ISO9000-2000 - it is an international quality standard that is very easy to implement in a small company - provided you know and can prove what you do. 3. CASHFLOW How much cash do you have? When will your customers pay? Are you credit checking, and chasing overdue payments? What reserve (cash or overdraft facility) is in place for emergencies? Have you anticipated possible emergencies? 40% of businesses collapse after a fire, because they have no risk plan. Sort out contingency plans. Go and see you bank, and they will be much more helpful, because they see you being a responsible person. 4. MARKET Are you keeping track of the market for your product? Is it growing or shrinking? How's your competition? Do you know what they are charging? What extras they are offering? If you don't know - find out. Employ someone or pay for research if you can't do it yourself through trade associations and the like. 5. FUNCTIONAL INEXPERIENCE What areas are you as a company weak at? Specific engineering skill? Marketing? What? What if one of your key guys left? What's your plan? Identify it and put in place what needs to be done to cover - training, succession planning, contracts for outside professional help. All these will mitigate against crises - spend time on these, and you won't need to spend time on putting out the fires, trying to keep your business alive. Who knows, you might be able to get home early for a change!
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This page was updated by Paul Hogwood, 7th May 2008
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