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As we keep abreast of the overall business news, there is the constant reminder of the economic challenges we all face.

Spending has slowed, and more than ever consumers are being stingy with their disposable income and are only purchasing necessities.

In the meantime, media inform us that the economic tussle is now a normal part of doing business. No doubt you've seen headlines like, "Retail sales remain disappointing," “Company A posted lower income and revenue,” “Company B saw earnings plunge,” “Company C closing 22 more underperforming stores,” and “Mounting losses at Company D.”

Distressing headlines like these make company executives uncomfortable, and that might be a cue for all of us to examine our own operations before a possible future unknown shock materializes.

The gravity of today’s economic-related issues is creeping into sales and profit levels throughout most businesses in all markets. Furthermore, the near-term outlook appears to be even more challenging. This state of affairs can catch a company by surprise and send it into immediate panic if it does not have a Phase II program in place.

The first phase encompassed every cutback imaginable for a company to dramatically stop spending throughout its entire operational system. Many companies made it through tough times because they took immediate action early enough to maintain consistent operations. Most survived, but the cost cuts eventually dissolved over time. As the cycle continues, expenses are now beginning to creep up again.

Major cost reductions are typically initiated by corporate officers, who pass them down the line through the lower levels of management.

But as the cost cuts take place, confusion usually sets in as much information is unknown or withheld by management. Subsequently, it affects every factor in the workplace by changing gears on programs and people. This often causes risks in ongoing business due to morale deterioration among workers. Sales declines for any company today can be devastating.


Enhancing Phase II
What is Phase II? Simply put, it is moving to the next level of retrenching a business’s operating channels. This time, there is a need for a different method of overhaul rather than just concentrating on across-the-board cost cuts.

Phase I served its purpose well by saving money with operating cuts. But to repeat this function again in Phase II would undermine sales and profit performance considerably. Cutting expenses too far could actually be more costly due to decreasing sales.

Therefore, it is time to focus on alternative areas in order to reconnect your business with the current trends. This could easily be accomplished by enhancing operational functions to repair any damage done from earlier cutbacks.

Since companies managed to be led off one path and drawn onto another, sales growth became harmfully disrupted. Suppliers and retailers now find themselves with the challenge of putting the sales pieces together again.

This task won’t be easy because consumers are spending less due to economic woes and job worries. Nevertheless, businesses could still do more to get back in the game by managing other sectors of operations. Consider these 10 tips as a gateway into Phase II to enhance business operations:

* Repair your competitive position. The magic words today are “low prices.” If your competitor is $1.98, you shouldn’t be $2.89. It’s as simple as that.

* Fix customer service. This has been destroyed during Phase I cutbacks and is in desperate need of mending. Take this one very seriously.

* Adjust to customers’ needs. Always remember that customers buy what they want and not what you want them to buy. Go from there.

* Restore good salesmanship. Enthusiastic selling has gone astray. Re- energize salespeople and use new format ideas.

* Recuperate shrink loss. Get everyone back on the loss-prevention program.

* Boost employee commitment. Inspire workers at all levels to remain loyal to the tasks that keep the company healthy and jobs secure.

* Upgrade current products. Improve what you sell, and give consumers a new reason to buy your products. Put new life into your offerings and make them unique.

* Further elevate production and processing. Move to state-of-the-art mechanisms to increase productivity and reduce waste.

* Keep costs in check. You’ve already performed the cost-cutting process, now make sure they are operating efficiently.

* Apply motivational leadership. Encourage the workforce, and guide your team to victory by giving them full support.

Take a different perspective this time around in tackling economic challenges. Drive your business by using fresh ideas and transcending old methods instead of always taking the cut-and-chop approach. This is where the proper leadership level is vital.

(Ron Pelger is the owner of RonProCon, a consulting firm for the produce industry, and a member of the FreshXperts consortium of produce professionals. He can be reached by phone at 775/853-7056, by e-mail at ron@power-produce.com, or check his web site at www.power- produce.com.)