4 Value Adding Opportunities for the start-up phase
This week I’m looking at value adding opportunities for all phases of a company life cycle. This could also be applied to a company’s product or service life cycle. This information is provided to assist sales people deal with their customer’s situations and internal managers looking for ways to improve the performance of their company.
So the first cycle is the start-up or entry phrase. The company is starting from nothing and has a boat load of high priority areas that must be dealt with everyday. Usually there are changing priorities and crisis management rules the day. Even with the daily changes – there are four areas that I believe you can focus upon to increase the performance and opportunities. Here are the four opportunities:
1. Focus on methods to insure that market entry is on time or earlier that planned. And if you can do this less expensively then you have saved the company/customer precious start up cash. Since a start up operation will have limited cash flow, the need for fast response, saving cash up front or being the first to market will increase a companies chances for success. Salespeople who can share valuable information and knowledge regarding increasing the speed of entry or save cash in the early days of limited cash win more business with these customers. The reason, they add value to the customer and assist in their success.
2. Ensure product reliability to avoid costly repairs under warranty or recall. Again, the cost of creating a product a second time is very costly or even sending a customer a new product doubles the cost of goods for the individual sales. It also causes a productivity decrease due to valuable time being spent to rebuild or repair existing products. The focus here is two fold – lowering costs of production and saving valuable cash for higher priorities.
3. Avoid unnecessary fixed costs. Again the rule of the moment is to conserve cash at all costs. Major equipment should be leased rather than purchased for cost. Leasing operations is more important than owning land, equipment and temporary help can be leased during the start up phrase. Save cash, save cash save cash is the major theme.
4. Set up inventory systems to monitor inventory levels. The more back ordering can be eliminated, the higher the opportunity sales are and cash begins flowing back into the company. Also, just like fixed assets, base levels of inventory can use up cash reserves. So a system that monitors inventory levels keeps you or your customer from overstocking inventories. Overstocking also tends to lead to having obsolete inventory items that become a fixed investment and create major problems for inventory turnover.
There are the four major areas, if you are aware of any additional areas of focus for the start up phrase of a company or product – then add a comment to this blog post. I welcome suggest and others experiences. Check back Tuesday for the next phrase – the Growth Phrase.
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