Get your house in order

Our UK-based correspondent gets the year off to a barn storming start. Want some no-nonsense advice on how to weather the current economic difficulties? Then read on.

So, a recession is upon us. The banks have stopped lending to each other, consumer confidence is at an all time low, one of the news websites stated that 84% of people thought that things were looking bad for Great Britain Ltd and the Bank of England drops the base rate by 3% in the 3 months before Christmas, including an unprecedented 1.5% cut in November. Whilst the bank rate cut will bring cheer to some mortgage payers, will it help our industry and just how bad is the recession in the Audiovisual world and how bad could it get?

Well no doubt confidence is low, but are things really that bad? Sure, a lot of firms have cut back on big ticket AV projects, some AV dealers (and indeed end users) have shed staff. A few manufacturers and distributors have also slimmed down their workforce through natural wastage or redundancies. But is the core business still there?

Well, I believe it is. But not in the shape we are used to.

The consultants are still busy and that’s a sure sign that things aren’t as bad as they could be because in a serious recession the first thing you can cut back on is outside consultants.

In InAVate last month, Gordon Innocent from RGB Communications talked about how business had been flat for RGB over the past year in the traditional market areas with banks etc not spending money on the projects like they used to. That is so true – many of the “big corporates” are holding onto their cash but they all still need video conferencing, they all need to make presentations to their clients and they all need to present to colleagues internally, even if the news they are delivering isn’t as positive as it could be.

So if one market sector is down, diversify and find yourself some new markets. Digital signage is the big growth area at the moment. A walk around the brand new Westfield shopping centre at Shepherds Bush revealed endless flat panel displays showing just about everything from pseudo-Powerpoint presentations to TV commercials and directions to the toilets.

If you normally sell to Education, try the Police forces as a potential new market. If your normal customer is one of the big banks or law firms, try calling on some Government departments and see if you can drum up some business there.

But what else can we as dealers, distributors and manufacturers do to ensure that we are all still in business in 12 months time?

Firstly, we all need to get our respective houses in order. That means cutting your excessive costs. Learn to switch off your lights to cut your power bill. Are you making the most of your vehicles? Do you really need 16 vans or could you make do with 14 and rent others when you are pushed for transport? Need some office desks – why buy new when there are plenty of ex showroom offers on at the moment.

Make sure you switch off all the electronic equipment in your office when you go home. Not only is it better for the environment, but it will save you money too.

Next, let’s look at the projects we carry out. If you get each project right first time it means you won’t have to go back and sort out the problems at a future date. It’s far, far cheaper to spend an extra couple of hours on site at the final install than it is to send engineers back a few days later to finish off the job. We all get under time pressure so it’s tempting to cut corners – DON’T! It only creates more problems (and costs) in the long run.

If the client pushes you for an early completion explain how you need to do the job correctly and that you need the originally agreed time to avoid the work being rushed and you (the dealer) having to come back again later. If the client insists on an early finish then look at asking them for additional funds to pay for the extra labour etc. Dealers should also review their sales terms & conditions to allow for scenarios such as this and facilitate the ability to charge for such occurrences.

Not got many project enquiries or sales coming in? Then beef up your marketing. Get on the phone! Call customers you haven’t heard from for a while, see if they have any work coming up in the near or far future. Don’t forget the opportunity to sell consumable items such as projector lamps. Then try some cold calling on potential customers. Remember that big office block with the fancy sign outside you drive past on the way to work each morning? Next time, make a note of the company name and make a cold call over the phone to them. Find out what AV kit they use, how they use it and make yourself an appointment to drop in and say hello. Next – maintenance contracts, For every system you sell, you should be following up for an out of warranty maintenance contract sale 8 to 10 weeks before the warranty expires. Maintenance contracts are a great source of income generation and will keep your engineers busy even when your installation work is quiet.

Form some strategic alliances with non-competitive companies. We’ve seen the recent birth of ‘Distribution Partners’ – a small gathering of independent niche AV distributors who are teaming up to take on the big badge collecting ‘pile it high, flog it cheap with no support or margin’ guys. If you sell dynamic signage systems, go and talk to some content providers. Link up with them. When you have sold a hardware system see if you can introduce your new found allies to the customer. If they get some work out of it make sure you get a small commission and if the content provider passes you a lead that results in some business, make sure you pay a modest commission in return. Working with others in an allied but non-competitive field is a great way to find new customers and get sales leads. Mutual business referral is far easier than cold calling which is why I don’t understand how so few companies actually do it.

How well do you know your supply chain? Your suppliers aren’t there to try and screw a few extra points out of when you have sold something at a low margin – the supply chain is there to work with you to build mutually profitable business. When was the last time you saw the rep from your major suppliers? Do you have a good relationship with them or do you do everything possible not to see them or build rapport? I’m not saying have tea and buns with every rep every 3 weeks, but when things are tough if you have a good supply chain relationship, it can help prevent things like credit lines being tightened up and if you are late paying an invoice one month if your suppliers know you well they won’t start to panic.

How good is your CRM system? Does it need an overhaul? Full of useless data? Well now could be the time to purge it. Go through all the contacts and check that they are still in their jobs. If people have moved on then establish who the new contact is and start talking to them. They may have switched to someone else they have used previously and you hadn’t realised.

Be open with your staff – explain that things are tough and that you need to save money. Ask them to stop using things like post-it notes and keep down the phone calls where possible. Think about re-negotiating with your stationery and mobile communications suppliers. Maybe go for some fixed rate calling packages so you know how much your telecomms bills will be each month.

If you are forced to cut staff don’t do it on a ‘death by spreadsheet’ basis. Look at each member of staff individually; what do they bring to the business? A senior and well experienced engineer will no doubt cost double what you would pay a junior, but they no doubt have a wealth of experience. If you were to make that person redundant you would lose that experience and talent. Far better in my book to release some of the junior engineers, admin and sales people and keep your best staff so you can still effectively run your business. And don’t cut back on training your staff – they are your greatest assets so don’t neglect them. Maintain your training budget so your staff will be better trained and better able to support the business.

But I suppose the most important thing is to keep a positive focus. Talk it up not down – I honestly believe we have talked ourselves into a lot of this recession and the media haven’t helped one bit. Keep smiling, even when it’s bad so as to not appear too disheartened to your staff, which could get them worried.

And finally – hold your nerve. All businesses have to produce a profit to stay functioning and the investors have often risked their houses and everything else to get the company going and quite rightly want a return on their money. However, knee jerk reactions to the slightest wobble in the market and prophecies of doom help no one, including yourself. So ride the storm, if you can then accept lower profits for a year or 2 and wait for the up turn to happen. Which it will.

Recessions don’t last forever.

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