Encouragement to Avoid the Bunker Mentality Response to the Economy

No one will deny that we have not seen this type of economic environment since the days of President Carter. These are tough times and we all hope that the current administration’s policies do not create a repeat of those troubled years. In this economic environment, most businesses have experienced a dramatic reduction in revenues and have seen temporary inventory growth that has tied up even more of their precious cash. In response, they have dramatically reduced discretionary spending on what they consider non-essentials. They are just hunkering down in their bunker, hoping to survive until there are signs of positive economic trends. There is a danger to this approach. Most businesses that survive this downturn will not be successful long-term if they just continue to operate their business the same way they did before the downturn.

In the new economy, the businesses that will be successful will have to be very responsive to their customers and lean with the assets used to do so because it will be much more difficult to obtain working capital to finance their business operations. Therefore, they have to free up this cash from their existing business, mostly in the form of significant inventory reduction but perhaps also in fixed and capital assets.

This is why we encourage business leaders to use this time to be proactive and reassess their business and identify the areas that they need to change. How do you do this? First of all, the current performance capabilities of the business are what they are because of the leader’s direction, good, bad or indifferent. Therefore, if there are improvements that need to be made, the ideas for these may need to come from outside of the organization.

This need for new ideas, and how to implement them, is where OMC comes in. For over 35 years, the principals of OMC have been at the forefront of leading dramatic improvements in business performance. These programs reduced operations and product costs while simultaneously freeing up cash tied up in inventory and other capital assets by 33% to 75%, depending on the business situation. The case studies shown on our website detail the levels of these improvements. Of greater importance is that without exception, we were able to structure the improvement programs so that they were self-funding. In other words, the savings from the programs paid for the consulting fees many times over, and in support of these recommendations, provide the cash to pay for immediate improvements.

In closing, business leaders have two options. The first is to just bury your head during this time and hope to survive. However, your business will not improve operationally during this time and you will not be prepared to compete when the economy turns around. The better option we recommend is to search out firms, such as OMC, that will provide insights into dramatic business and operational improvements. If the opportunities exist in the business, the immediate savings from these efforts will pay for the programs, positioning your company as an industry leader and fully able to capitalize on the future opportunities as they avail themselves.

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Posted in Blog Post, Growing Businesses, Mergers and Acquisitions, Restructuring Businesses, Selling Businesses and Struggling Businesses

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