Newmarket CURVE Programme for Recovery
Cashflow, Undo your Expectations, Right-Size Your Business, Create a Vision, Become internally Efficient and Energise your people
Welcome to our second Ezine and a Happy and Prosperous New Year to Everyone.
Of course we all know prosperity will be hard earned in 2009 and will not be a matter of chance or good fortune. That is why in these challenging times we developed our CURVE programme. More details are available on our website but in short it is about the corrective action we need in order to get our businesses into shape and be ready for the upturn.
And of course Newmarket is ready and able to help you with this challenge!!
In this edition we are looking at Undoing Expectations.
Most people have by now got used to the idea of lower sales and looked at cost savings. However in Newmarket we believe it runs much deeper than this, and businesses now must be prepared to look at their businesses in a different way.
What was unthinkable even 6 months ago is quickly becoming the norm. In August the Government agreed a pay increase but today it is actively pursuing a decrease. Aer Lingus has radically changed its cost base without losing its core. And we all know that Ryanair was built on breaking the mould.
The key to survival in our view is to radically lower the breakeven point of the business without losing core values. Slash and Burn strategies are usually self defeating in that they can undermine the business. However coherent strategies for the business will help ensure survival and leave you well poised to deal with the upturn. Targets should be ambitious and bold decisions must be made.
The starting point in our view is to change rigid set fixed costs. Fixed costs have arisen in all businesses over the past ten years, because in an environment of tight labour markets and various bottlenecks, businesses were price takers. We had to pay the price in the market place to hold onto good people and pay the high rents to be in the right locations.
These embedded costs must now be challenged because the barriers to change are low. Your people are ready and able for change provided you embrace it. They will embrace change when they see that it is a workable plan based around some core concepts:
- A greatly reduced cost base without loss of core values and competencies i.e. a lower breakeven point means a greater chance of dealing with a downturn
- A share in the success of the business; not profit share necessarily but certainly reward for achieving the goals of the business
- A flattening of management structures and increases in accountability
The key objective from the owners point of view is that what is good for the employees is good for the business. Goals must be aligned. People are rewarded for generating profit and not just sales. Everybody benefits and shares in rewards.
Some examples of strategies for long term success:
- Building Service company changed all staff from hourly rate to piece rate- result higher productivity, fewer staff with rewards per staff at same or higher level
- Retailer achieving 25% reduction in rent
- Manufacturing Company outsourcing production
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man”
George Bernard Shaw
For more information of how Newmarket can help your business contact us at info@newmarket.ie
