Nine ways to prime your pump in 2010
Most businesses surveyed in the 2010 EKS&H Business Outlook believe revenues, profits, employment and capital spending won't get worse this year, reflecting a cautious optimism undermined by a concern about pressure on pricing and margins.
Our survey of 173 clients in a wide spectrum of industries and sizes also showed that business owners expect growth in revenues and net profit, but not as much in employment and capital spending. Natural resources and manufacturing companies were the most optimistic while, to no one's surprise, retail was the least optimistic and construction did not fare much better. Technology companies showed the largest disparity in responses.
The top four goals for company owners are to improve financial importance, grow sales, find and retain good people and increase business value. Not entirely unexpected given the decline in performance and value in the past few years. Pricing and margins repeated this year as the top challenge, and inadequate access to capital remained a high concern for the second year in a row at number three on a list of 12.
Every year, we survey our clients to better understand the local economy and how best to devise the best strategy for success. Here are nine insights this year's survey tells us:
1) Have a plan for growth developed and ready, even if you're uncomfortable with risk.
2010 growth expectations greatly improved from 2009's survey. As the year unfolds, be ready to act quickly.
2) Watch out for employee burnout.
Expectations for growth in employment are less than those for revenues and profit, which means we will be expecting more out of our employees this year on top of an already stressful 2009. Add in little wage growth and it will be hard for employees to understand, "Your reward is that you have a job."
3) Don't save on the oil change and replace the engine.
With capital spending at lower levels for the second straight year and growth in the plans, make the small investment in maintenance to avoid the bigger expense of replacement.
4) Don't fall back into old spending habits.
You've buttoned up your budget and feel good about your new efficiency. This recession did have a silver lining: Better spending habits. Don't let an improved outlook change that.
5) Grow by being different.
"Grow sales" was the second-ranked goal in this year's survey and "inability to differentiate from the competition" was the second highest challenge. The second might be the cause of the first. One place to look for that differentiation to drive growth is with your existing customers. Be sure to ask what more you can do for them.
6) Upgrade your talent.
Finding and retaining good people is a prevailing goal for the third straight year. While expectations for growth in employment and wages was moderate for 2010, do not forget that now is an ideal time to pick up great talent from your competitors.
7) Protect your future talent.
You must also be aware of your competitors trying to steal your best talent. Re-examine the alignment of your compensation package with your strategic goals and assess its ability to reward and retain key performers.
8) Broaden your capital Rolodex.
Inadequate access to capital remained a primary concern of business owners. Be proactive in expanding your contacts among potential sources of capital and be sure to keep your current providers happy with timely financial statements and proactive communication.
9) Embrace technology as a core part of your future success.
The challenge of "unstable/inefficient/outdated technology" showed the greatest rise in importance from a year ago. Technology is an essential ingredient in increasing efficiency in your business and creating a sustainable competitive advantage. It's also best dealt with when the company is not running at 90 miles -an -hour, so make the changes now before the growth hits again.