Navigating 2008's Choppy Waters

By: Tom Sarach, Jr.
Date: 2/1/2008

What is 2008 going to mean to you? When this new year comes to a close, how will you remember it? Will it be a year spent adrift, blown by the winds of change, or is it going to be a year where you set your own course no matter how the winds of change howl?

At the time that you are reading this article, economic analysts nationwide are predicting that there is a 30 percent to 45 percent chance the economy will roll into a recession some time in 2008. The sub prime mortgage debacle is raging unchecked, causing mortgage foreclosures to set a record in the third quarter of 2007. There is a presidential election on the horizon, which means that business is still going to try to continue to move ahead and hold its breath at the same time. And just to put another stick in the spokes, the American Staffing Association's 2007 third quarter survey is showing that after five months of relatively flat staffing demand, the need for temporary workers suddenly shot up 2.3 percent, tightening the available labor market even more than in the past.

It's enough to want to make you want to pull into the first port, regardless of its reputation, and wait out the storm.

I say sail on. There's opportunity over the horizon and it's called an operational audit. It's time to take a look at the operational side of our business, make it more "sea worthy," so that we can sail smoothly during the good times and have the ability to handle rougher waters by being efficient and disciplined.

Because there is the risk of a recession, an early look at operations will pay dividends if more difficult times arrive. Sometimes the companies we service, especially when times start to get hard, have a tendency to be slow in compensating us for our services. That's why I think one should start their operations audit with receivables. Look for those that are paying slowly and work to bring them current and put unmovable standards in place.

Watch for clients that suddenly skip an invoice as this is a clear sign of troubled waters ahead. Accounts with late payment should be put in check while they are still using you, this leverage is beneficial to speed payments when pulling staff out should be used to your advantage.

By putting this type of standard into place, it creates a discipline that will benefit the cash flow of your organization in both the lean and boom times.

Your receivables are only as good as your client's ability to fulfill their payment obligations. While you have probably worked out individual compensation agreements with companies already on your books, because of the potential for turmoil this year, prospective new clients bear closer examination before bringing them on board. In other words, it's ok to be selective about who you work with.

You may be tempted to jump at that new account that says they need 200 people. Before you sign on the dotted line don't look at them just as new revenue. Take the skeptic's approach: get to know who they are, their reputation in the marketplace, determine their business cycle - boom and bust or fairly consistent. All of this will have a bearing on your business. You also need to ask yourself if you would be proud to have this particular organization as a client.

A look at operations should also include examining the technology that runs your office. This is when you should be asking yourself whether you are maximizing the potential of your software, are you actually using all of the bells and whistles that the software salesperson told you about. Additionally, are you leveraging the expertise of the organization that created the software?

If you've been getting by using just the basics of your software, it's time to dig in and learn more about its capabilities. Doing so has the ability to make you more productive, efficient and responsive. Additionally, it will ultimately help with recruitment and retention by helping you fine tune searches.

If a recession does materialize, your clients will still need people, but the employees you send them will, more than ever, have to be able to hit the ground running and make valuable contributions. You're going to have to be able to deliver the right people at the right time.

My suggestion is that you tap into the support services of your software provider. Ask for seminars that will help you learn the efficiencies of your system. Ask how the tools in the system apply specifically to your needs. Ask to speak to a person, not voice prompts, pre-recorded answers or FAQ sheets.

This is an exciting time of year in more ways than one. We can make predictions and try to plan for things that may not actually come to pass, or we can resolve to take a look at what will actually make us better and more efficient, so that a strong base is in place for any type of "sea change."

Tom Sarach, Jr. is the Vice President of Operations for COATS, Inc., a staffing industry technology provider based in Virginia Beach, VA. He can be contacted at 757-499-3808, or by email at tsarach@coatssql.com.