Plan More, Worry Less
Here are my thoughts on a few topics that might affect your business this year and one or two things you might want to do about it.
When anyone tries to impose their opinions on others - as many politically and socially focused people do, I find that those persons have often lost sight of what is really happening around them. They find a source that says what they want to hear then stop exploring. The focus becomes the message, not the response. In business, that it a really unwise move. Take the so-called Fiscal Cliff that has occupied news for weeks and weeks. Regardless of your opinion of what the budget outcome should be for the US, something will happen and chances are you won't be happy with it. In other words, you will spend a lot of emotional energy on something you have no control over rather tan engineering your response. I am not going to suggest that you or anyone withhold their opinions on things that matter to them, but am going to suggest that you might want to run your business based on what will probably happen.
My opinion is that the economy is chugging along quite well. If you don't agree, that is fine. My point of this column is to suggest that you act on your beliefs instead of waiting for someone to prove you right or wrong. The reason I believe the economy is strong is that I do not under most circumstances watch the news on television. I rarely look at a newspaper either. If you have known me for very long, you will understand that this behavior is a 180 degree shift from years past when I read two papers a day, watched the news as often as I could, and kept up with multiple online news feeds. By avoiding the news (I monitor headlines in case there is something worth knowing about), I read or listen to stories I think that matter. What I have learned about the economy is that corporations have a lot of money waiting to be spent, profits are up (look at the stock market averages), and in spite of trepidation about the US fiscal cliff the mood is positive. In short, unless something extraordinary happens we should expect 2013 to be another great year. My faith in humans is that the idiots only get to run things for so long before the smart people find a solution.
Good planners take into account the things that could happen, but it takes discipline to separate what you want to transpire from what will most likely occur. If you think the economy is going to tank, then you could make some good money betting your business that direction. If you think the economy is going to grow, then perhaps you would invest in marketing, business development, new products, or infrastructure. Maybe all of these? However, if you are wrong you could lose everything you have worked so hard for. Chances are you are like most folks and aren't sure enough either way to risk anything. There is a perfectly reasonable course of action to follow if you expect your business to go up or down 10%.
If you think you the economy will grow in 2013 and want to take advantage of all that business that the pessimists say isn't forthcoming, then take some risks. Hire well-networked Biz Dev persons, invest in money-saving infrastructure, raise prices, raise salaries, increase benefits, make an acquisition, increase operational capacity, move to that bigger building, and wait another year to take money out of the business for yourself. Now would be the time to take on some debt at super-low rates to fund growth.
On the other hand, if you are sure that the US Congress (or the EU) will make the wrong choices and steer the economy into another recession, then you would be wise to act upon that prediction. Downsize seasonal staff, cut back on spending everywhere you can, slash prices to keep customers in your portfolio, cut marginal performers, and move available cash out of the business and into personal accounts with safe investment plans.
Most folks will sit on the sidelines to watch the risk-takers and openly hope they fail. Many will kid themselves that this decision was a conscientious one, but for most it will simply be a non-choice. Do nothing and hope that "a rising tide will lift all boats." The problem with this position is that rising economic tides lift prepared companies faster and further. The sideline sitters grow and shrink with the changing economy and have little control over their lives (picture them bobbing in the waves). Still, this is an appealing position for many and if this is where you want to be, then you need to prepare for both a rise or fall in business. Hedging like this mitigates both losses and gains:
- Keep staffing levels low and only hire when the benefit is permanent.
- Accept lower margins to maintain revenue
- Make do for one more year on infrastructure needs
- Take money out of the company, but keep it in liquid accounts in case you need to put it back in
- Decrease benefits while giving small salary raises
2013 will be a year of refreshing innovation. Manufacturers of high technology products are not sitting on the sidelines. They are adding cutting-edge products and jockeying for market share. In the past two years we have seen a lot of mergers in manufacturing specifically because these companies know that economies are not forever and you have to move forward just ahead of the tide. We haven't seen this much new tech or innovation since 2002-07. For this reason, I think that smart companies should adopt as much new technology as they can in terms of products, processes, and infrastructure to take full advantage of recent developments. This will mean forcing your engineers, designers, technicians, salespersons, and administrative staff to get out of their comfort zones. But it also means you have something exciting to take to your clients and prospects.
Speaking of new tech, it is time that you revisit The Cloud and see where this is really taking us. Not only do you need to understand its implications for your business, learn what it means to your customers. What are they going to do differently? In 2013, our society will embark on a new understanding of the architecture of information.
While most of my readers are gearheads and focus on the boxes that contain technology, most innovation is in software. As for users, their software experience is the user interface. If you can control what the user sees, feels, and controls - then you will be extremely valuable to that customer. So much of how we present ourselves to the customer is controlled by software. Are we controlling that software to work for us or are we working for it?
I think 2013 will also be a year where lots of people change jobs. Why? Because they can. When economies improve, people move to better pay, benefits, opportunities, and locations. If you don't want your people to leave, then you might want to revisit your position on the economy. In general, salaries have not increased much over the past four years and with good reason. However, employees see that their companies are doing better and want to see a reward. If you are one of those businesses that has sat on the sideline for a number of years, some of your employees might be looking for something more exciting. And if you are in a chronically depressed region, there are plenty of places for them to move to that have better pay and a more positive outlook.
What should you do for your employees in 2013? Take a look at your total compensation package: salary, bonuses, and benefits. It has become difficult to maintain the quality of benefits due to the rising cost of health care, but if you are paying any portion of the employee's cost then focus on that as the benefit. Handing out raises sounds like a it would be a real morale booster, but I recommend that you first evaluate what market rates are for all the positions you employ. I have seen too many companies hand out raises until they have key employees grossly overpaid for their jobs. Instead, of across the board raises, adjust those that have fallen behind the market and hand out merit bonuses. Remember that a bonus is a one-time expense and a raise is forever.
There is also an entire category of benefits that many often neglect to account for. Training, education, and certification are valuable to both the employer and the employee. You can also look at time off, computers, mobile phones, and trade show travel as measurable benefits. Adding a couple of vacation days as a one-time bonus can have a surprisingly positive effect. In short, be creative. Ask your employees what they would value most and give them some choices.
Have the 2013 You Want
In conclusion, what I really hope to convey from all this is for you to have the 2013 you want. Set some reasonable and achievable goals, plan for the inevitable bumps along the way, and try to have a positive impact on those around you. If you do these three things, I trust that happiness and satisfaction aren't far behind.
My Best to You and Yours in 2013.