Tag: Business Tips

Finding the Silver Lining in a Stormy Economy

Despite the doom and gloom of news reports, there is a silver lining glinting through our stormy economy. The trick, says Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association, International (FMA), is knowing where to look. In the FMA economic newsletter Fabrinomics, Kuehl reported finding three precious gems amidst the ashes that provide unique opportunities for savvy businessmen. Manufacturers and businessmen who make use of these three unexpected opportunities will position themselves to take maximum advantage of future opportunities as the economy recovers.

  1. Commodities. Costs are dropping on some of manufacturing’s most used commodities. After posting historic highs, the price of oil has dropped more than $70 in the past three months. While diesel prices unfortunately haven’t dropped at the same pace, the price of gasoline has plummeted to less than half what it was last summer. Steel and copper prices are also sagging. “In fact, most commodities have slipped,” Kuehl notes, “which is good for businesses where these costs are the biggest considerations. Of course, lower input costs don’t help much if demand for the finished product is off, but it doesn’t hurt to get some cost relief when the recovery begins to surface.”
  2. Labor. Unemployment has created a highly skilled, diverse and available labor pool. “The unemployment rise puts some talented people on the market,” Kuehl notes, “and that allows smaller companies to have access to people only larger companies were able to recruit in the past.” The strong labor pool provides an excellent opportunity for companies to improve their employee base and strengthen weak areas. Kuehl also notes that in a downturn people are more grateful for their jobs which can result in higher productivity.
  3. Banking. The mortgage meltdown and resultant credit crunch has taken a heavy toll on America’s banks. The Feds have been forced to shutter a number of small local and regional banks and even the big boys are hurting. Those that survive will be looking for smart ways to re-engage with businesses and consumers. This is the time to strengthen your relationship with your banker. The economy will recover in time and an effective banking partner will allow you to update and expand to take advantage of future opportunities.

Part 5: Why Businesses Fail

At DJ Products we believe in the value of learning from experience — ours, our customers and the business community at large. It’s not necessary to reinvent the wheel. The savvy businessman will learn from the experiences of others and turn that knowledge to his advantage.

With that in mind, we’ve been talking about why businesses fail (see our posts starting July 14). The economy is down, credit is tight and fuel is up. Times are tough and many businesses are struggling to survive. Taking a look at the most common reasons businesses fail may help us all to avoid the same pitfalls.

Continuing our list of why businesses fail:

  • Unwarranted personal expenses. The news is fully of greedy or sloppy businessmen (and politicians) who now find themselves fired or even jailed for using their business as a personal expense account. Hard-working businessmen deserve to profit from their labors, but they also have a responsibility to set an example of fiscal responsibility for their employees and create a profit for their shareholders. You need to be profitable to earn the perks. Set clear policies for charging expenses to the company that follow IRS guidelines and regulations. Set an example for employees and monitor expenses regularly to curb abuse.
  • Unplanned expansion. Entrepreneurs eager to capitalize on every opportunity may be tempted to expand quickly. However, unplanned expansion is the quickest way to run out of cash fast. Expanding a business should involve careful, long-term planning. Take sufficient time for market analysis to ensure that expansion is warranted and can continue to be supported by future sales. Develop an implementation schedule and don’t cut corners on the implementation process. Proper implementation is pivotal to the success of an expansion plan. A good plan, poorly implemented, will turn out to be a poor plan.

 To be continued

Is Absenteeism Hurting Your Bottom Line?

The nation’s 300 largest employers reported in a 2007 survey by research firm CCH Inc. that absenteeism costs their businesses more than a quarter million dollars annually in direct payroll costs. Add in lost revenue from lower productivity and unscheduled absences can have a significant negative impact on a business’ bottom line. In these recessionary times, absenteeism can make already slim profits disappear.

Only a third of all work absences are due to illness, said Susan Frear, director of education for the Dallas office of the Society for Human Resource Management. “The rest of the absences are related to having to be someplace else or they just don’t feel like coming in. So a lot has to do with the culture of the place.”

Changes in management style or corporate procedures can make a significant difference in absenteeism rates. “Take a hard look at the climate,” suggests Barb Ashbaugh, owner of Ashbaugh’s Trade Secret, a performance management company. Authoritarian managers “who make employees feel it’s their way or the highway” cause higher levels of absenteeism, Ashbaugh noted. Companies that count “occurrences” instead of individual days absent encourage employees to sneak in a couple of extra days off, warned Nancy Glube, an Atlanta human resources executive.

Retail giant J.C. Penney Co. is trying a new approach that shows promise for both large and small businesses. With 1,500 workers calling in “sick” and another 1,200 out on disability each day, Penney executives were concerned about the impact of growing absenteeism rates on the company’s profit margin. This fall they began project PowerLine. When an employee is absent for 3 days, the PowerLine team swings into action. They communicate with the employee to determine the nature of the absence and whether the employee qualifies for health insurance, workers’ compensation or short-term disability benefits. The team notifies store and department managers and insurance carriers and sends the employee the appropriate forms to complete. Daily absenteeism rates have dropped dramatically.

What has made the PowerLine program so successful in such a short time is the constant follow-up that continues until the employee returns to work. “I’ve found that when someone goes out on disability, that person undergoes a significant event in their life,” said Penney’s benefit manager Jim Cuva, “and if no one checks on them to see how they’re doing, they could stay out longer than necessary.” The PowerLine program is Penney’s way of “letting them know we care.”

Employees who know they’re valued work harder, are more productive and are absent less frequently. Making the effort to create a positive work environment can positively impact your bottom line. On Monday, we’ll talk about how implementing ergonomic practices in your workplace can improve worker morale, decrease worker injury and boost your bottom line.

Preventing Worker Paranoia

In times of economic uncertainty like today when people feel they have less control over their jobs, their income and their lives, it is common for people to engage in a psychological phenomenon called pattern perception (see our June 10 post). Uncertainty about the future generates feelings of unease that can cause considerable stress, leading the mind to search for patterns in events where no patterns exist. It’s a phenomenon that has people seeing conspiracies in government actions and finding hidden, unintended meanings in business announcements. It’s the phenomenon that causes people to think the worst when managers meet behind closed doors or co-workers start whispering. Illusory pattern perception feeds company gossip mills to negative effect, sowing seeds of dissatisfaction. The result can cause paranoia that negatively impacts worker efficiency, decreasing product quality and slowing production.

How do companies keep paranoia from spreading through their workforce? Human resources experts say open, honest and frequent communication is the key to reassuring nervous employees. Companies must be proactive in addressing not only internal gossip but external rumors. A brief news article or minor drop in a company’s stock can generate fear far out-of-proportion to the actual event. If faulty information is not corrected immediately, it has the potential to mushroom into panic that can cripple your workforce — and even worry investors and stockholders. Addressing issues as they occur via email, memoranda and company newsletter is important; but don’t ignore the value of the personal touch.

Nothing alleviates fear like the ability to address it head on. Open meetings allow managers to directly address worker fears, project calm and provide accurate information. Q&A sessions can provide workers with the opportunity to voice their concerns and ask for the specific information they need to feel confident about their position in the company. Allowing give-and-take sessions between management and workers provides managers with valuable information about worker concerns and the current psychological state of their workforce. For workers, such sessions meet two psychologically critical needs:

  • They allow workers a direct avenue to management, making them feel empowered and more in control of their destinies.
  • They serve to invest workers in company processes, increasing feelings of control by promoting a “we’re all in this together” sense of community.

Communication with its workforce should always be high on a company’s agenda; but in these uncertain economic times, effective communication with your employees can have a significant impact on both worker and production efficiency and quality.

Four Tips to Improve Your Warehouse Efficiency

Manager in Lumber Warehouse Holding Clipboard
Improve Your Warehouse Efficiency with These Tips.

Do you believe you have to implement major changes to improve efficiency in your warehouse? As the saying goes, the devil is in the details. Attention to seemingly minor steps will pay huge dividends in the bottom line. These warehouse management tips include four areas you can improve with just a bit of tweaking.

1. Always double-check orders

Even the best employees will occasionally make mistakes. The average cost of resending an order is more than double the amount of sending the original order. Can your company absorb these repeated expenses? Set a policy that all orders must be double-checked before leaving the warehouse.

2. Don’t forget the housekeeping

Look around your warehouse. Are you proud of its appearance, or is it cluttered and disorganized? It’s difficult for your employees to work quickly if they have to search for pick tickets, supplies or other necessary items. Establish a standing time each week to spend an hour or two cleaning the warehouse. 

3. Stay organized

Keeping the warehouse clean will be easier when employees take the time to maintain order with items that are frequently used. Having a home for everything reduces waste and makes optimum use of available space.

4. Have your senior employees walk the floor

It’s always helpful to have some fresh eyes look at the operation. “Outsiders” are more likely to spot a problem that has become ingrained in daily activities.

One of the best warehouse management tips is to provide safe and effective material handling solutions like our CartCaddy5WP. Contact us to learn more about how Team Cart Caddy can help improve your warehouse efficiency.

 

Does Your Business Have a Flu Plan?

The first doses of H1N1 vaccine are beginning to be distributed, though in most areas only those at greatest risk are eligible for vaccination. Hopefully, supply levels will soon allow vaccination of the general public. There is concern, however, that vaccinations won’t keep up with spread of the new virus. Businesses are being urged to implement a flu policy and prepare a sick-day plan if Swine Flu hits.

The pervasiveness of H1N1 and fears that it could become more lethal could take a toll on your workforce. The issue isn’t limited to coping with the extra workload caused by sick workers. Sick children or closed schoolscould also keep employees home. Some employees may not have enough sick or vacation days to cover unexpected absences and may report to work sick, spreading infection. Smart employers will consider possible scenarios ahead of time, establish guidelines for employees and managers, educate employees about flu prevention, and advise employees of company policies before the flu strikes.

Local Red Cross and County Health Departments may have educational literature or instructional videos you can use to educate employees. Some also offer employee workshop presentations that can be scheduled at your place of business.

In setting flu policies, health experts suggest considering:

  • Encourage employees to get a seasonal flu shot and H1N1 vaccine when it becomes available.   
  • Instruct employees to stay home if they’re sick; have managers send home sick employees. 
  • The Centers for Disease Control and Prevention recommends waiving policies that require a written doctor’s note in case of illness.
  • Prohibiting treats and communal snacks that are not individually wrapped.
  • Instruct employees to cough or sneeze into a tissue or elbow, not their hands.
  • Make hand sanitizer and tissues available.
  • Allow sick employees or those caring for sick children to flex hours or work from home.
  • The government is urging businesses to abandon policies that penalize workers for multiple absences.

Tough Times Call for Worker Morale Boost

The poor economy has been tough on American businesses, but it’s been tough on American workers too. Many employers are fighting low morale in their work forces as employees struggle with increased stress from financial worries on the job and at home. Poor morale negatively impacts production efficiency and product quality, decreases customer service, and can result in higher levels of workplace injury and absenteeism. Savvy businessmen will keep an eye on employee morale and address issues before they start to affect work quality.

The poor economy has created significant on the job stress for American workers. Many workers fear losing their jobs or being caught in the next round of layoffs. Even unpaid furloughs can cause significant financial strain. Those who still have jobs may not only suffer from survivor guilt when friends are laid off, but feel the pressure to pick up the slack from a reduced work force. With most companies cutting personnel to reduce costs, workers are being forced to accomplish more work with fewer people. Hiring freezes, loss of bonuses, reduced health care benefits and other measures necessary to keep businesses operating put further financial pressure on workers and have a demoralizing effect on a workforce that already feels over-burdened. Add in financial worries at home — mortgage payments, fear of foreclosure, high credit card bills, rising medical costs, high food and gas costs — and it can be tough for workers to fully focus on the job and stay motivated.

Business owners may have to step in and give workers a morale boost to help them get through these tough economic times. Here are some things business owners can do to boost morale and make workers feel needed and appreciated:

  • Personal touch. Make an effort to know your employees individually. Let them know you care about their lives, families and goals. In large operations, shift or line managers may fill this role; but anytime the owner recognizes employees personally, it boosts morale.
  • Roll up your sleeves. Whenever you can, roll up your sleeves and work along side your employees. Employees appreciate a boss who doesn’t mind getting his hands dirty and is willing to share the load.
  • Make it personal. Spend more time communicating face-to-face and less time communicating via email, phone and memorandums. Taking the time to make communication personal shows you value your employees as individuals.
  • Empower. Ask your employees for input and suggestions. Showing you value their opinions allows employees to feel they have a personal stake in the company.
  • Share your vision. Share your ideas and dreams for the business with your employees. Let them know you understand their concerns and are working toward a brighter future for all of you.

New Marketing Strategies Needed to Survive Lean Years Ahead

With the economic prognosis dim for 2009, U.S. manufacturers and businessmen need to rethink basic marketing strategies. Gone are the comfortable days of order backlog that manufacturers have enjoyed since the post-WWII. Everyone is scrambling to find new customers and new markets for their products. As Doug Gregory of Diamond Group Marketing pointed out in a February 9, 2009 article on Manufacturing & Technology eJournal, “you can’t cut and save your way to survival and profitability.”

To survive the next few lean years, you’re going to have to take excellent care of your current customers and work hard to find new ones. Gregory recommends a number of marketing strategies proven during previous downturns to help companies survive and even thrive. We’ve added some comments based on the benefit of our own experience here at DJ Products in building a successful material handling company with a national reputation for innovation, quality products and superior customer service.

  • Aggressive marketing. Many companies cut back on marketing efforts during a downturn. Survivors will buck the tide and increase marketing across the board. During tough economic times, potential customers do more shopping around looking for the best bargains. Getting your company name out there where they’re looking gives you a better chance to snag the sale.
  • Customer service. Without your customers you won’t have a business. Keeping customers happy must always be a top priority. During economic downturns competition heats up and you have to work even harder to keep your customers from jumping ship and going with the competition. Keep in regular contact with your customers so you’re right there to meet their needs as they arise. In a downturn, companies typically decrease inventories to cut expenses. You’ll benefit if you can provide customers with fast order turnaround and guaranteed delivery dates.
  • Strategic diversification. A tight economy forces you to expand and diversify your customer list, but make sure you don’t lose your core focus. You don’t want to dilute the expertise that sets you apart from your competitors and draws customers to you in the first place. Look for new customers with needs similar to those you now serve. Take a look at your current customers’ competition. With the same needs as your present customers, they present a ready market for your products.

Next time: Where to look for new marketing opportunities.

Where to Find New Marketing Opportunities

Competition is even tougher than it was before. Most sectors of the economy are expected to post losses through 2009 with little improvement expected until sometime in 2010. The bottom line is that for the next year or two everyone is going to be scrambling for a bite of a much smaller pie. In our last post we shared survival tips from DJ Products’ own experience and from Doug Gregory of Diamond Group Marketing (see his February 9, 2009 article on Manufacturing & Technology eJournal). Aggressive marketing, superior customer service and strategic diversification can help your business survive a bear economy, but to thrive you’re going to have to start searching for new customers.

Gregory and others agree that there are bright spots glimmering amidst the general economic gloom. Certain industries are expected to thrive and grow in the coming few years despite the downturn. Savvy firms will target marketing and sales campaigns to take advantage of expected growth in the following economic sectors:

  • Food industry. As Rally’s, a local burger joint, advertises, “You gotta eat!” The entire food supply chain from farm to table provides multiple opportunities for growing your customer base. Agricultural equipment, fertilizer, transportation, processing, packaging and retailing are just the tip of the food industry pyramid.
  • Pharmaceutical/health care industries. Baby Boomers, the world’s largest population segment, are aging. Demand for pharmaceuticals, health care products and health care services is expected to increase and remain steady over the next three decades.
  • Energy industry. Companies that produce, process or deliver energy products are excellent growth targets. With support from President Obama, increasing federal funds will fuel the development of alternative energy options. However, viable nationwide replacement of current energy sources is years, even decades, in the future. Current oil, gas and coal operations are expected remain strong with increases coming in their development of new, cleaner, more cost efficient applications for their products.
  • Transportation industry. Traditional transportation will still flounder for a while until production volumes and consumer spending improve. But there will be opportunity in infrastructure improvement and rebuilding fueled by federal stimulus spending and job creation. And watch for opportunities in new public transportation options still on the drawing board. Last year public transportation ridership posted a 52-year record high. As America struggles with energy issues and global warming, expect increases in innovative mass transit projects.
  • Look south. Southeast and Gulf Coast states are experiencing a manufacturing boom benefiting in part from post-Katrina spending. Census figures indicate that Americans are moving south, seeking jobs and better weather. Environmentalists are leery about the Southwest, however; which is already experiencing water shortages and some fear believe is on the cusp of long-term, possibly terminal draught.

Changes Coming to U.S. Workforce

If the current economic downturn has revealed any truths, it’s that the basic premise upon which employer-employee relations has been based in America is changing and must continue to evolve. Business owners can no longer afford to assume the role of in loco parentis. The cost of comprehensive health care and lifelong pensions has simply become too great for employers to be expected to take care of their employees the way they did 50 or even 20 or 10 years ago.

Gone are the gold watch days when people could expect to find a job fresh out of high school or college and stay with the company until retirement 30 years later. Employees no longer feel that kind of loyalty toward their employers any more. And technology is changing so rapidly that business owners can’t guarantee that today’s job will be needed five years from now. Naturally, these aren’t new ideas. Like all things, the business world is always evolving; technological advances seeming to speed change with each coming year. What’s new is that long-standing employee groups like the United Auto Workers are finally realizing that the employer-employee patterns that worked for their grandparents simply aren’t viable in today’s workplace.

With unemployment at a 25-year high, jobs may be scarce now; but work will return. But when it does, jobs are likely to be different. Both employers and employees should prepare themselves to face a workplace that may be vastly different from the one we enjoyed before the economy fell apart. In its May 25, 2009 issue, Time magazine addressed these issues, predicting a workplace that is “more flexible, more freelance, more collaborative and far less secure.” According to Time, the next generation of business owners and managers will bring new values to a business world where women will control an increasingly bigger slice of the pie. With the demise of the steel industry and potentially terminal illness of the auto industry, Time also sees jobs leaving the Midwest in droves and moving to Texas and the Southwestern states or Georgia and Florida.

Job expectations, business education, career paths, benefits, retirement, work-life balance, environmental savviness, management style, office spaces and manufacturing are all in for some major upheaval. Next time we’ll explore coming changes in the business world.