Reallocation

A year ago, few imagined the economy would still be taking a beating today. Yet here we are, and we’re probably more unsure about the future than ever. Many companies are still struggling to be profitable and are doing more with less.

Given the grim outlook for near-term growth in top line revenue and the cost-cutting that has already taken place, what more can be done?

Very little. Your time is better spent focusing on maximizing the return from your company’s remaining resources. Your organization can no longer afford underperforming or misappropriated resources.

Reallocation of resources can maximize your return and help you survive, and even thrive, in lean times. By ensuring that resources are utilized where they provide the greatest benefit, better decisions can be made when budget-driven cutbacks become necessary, as well as when expansion is under consideration.

Assessing current resource utilization and return requires questioning how and why nearly every activity in the organization is performed. Your mindset throughout the process has to be two-pronged — “There must be a better way” and “Nothing is sacred.”

Start by establishing objectives. Make sure you understand what you are trying to accomplish and what outcomes equate to success. Then make sure objectives and expectations are shared with and understood by everyone in the organization.

Employees need to understand why it is being done and what the alternatives would be if no action were taken. If not done carefully, the process could create a stressful and unproductive corporate environment. For the best results, consider giving employees the opportunity to take an active role.

Assuming your objective is to direct more of your limited financial and personnel resources to activities that directly serve the customer rather than to activities that indirectly support activities, then this is the place to start your assessment. Organizations tend to get fat in indirect support areas when times are good. Mining these areas usually results in excess or underutilized resources that can be reassigned.

This process is intended to maximize the return on resources. Its primary objective is not to cut overall costs and resources but rather to reassign them to more productive activities. Keep this in mind and you’re well on your way to increasing top line revenue and strengthening your organization. Joel Strom ([email protected]) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.