Tactics for Surviving and Thriving in this Volatile Market

I had the pleasure of speaking at the Mid-Atlantic ACA Collectors Unit meeting in Baltimore a couple of weeks ago for the second year in a row.  The topic I covered this year was “Special Challenges for the Small Agency – Solutions for Surviving and Thriving in Today’s Economy.”  (you can view the presentation slides at http://www.kaulkin.com/go/insight/presentations#2009)

We spent a lot of time talking about the following:

• The Current Economy and What that Means to Small Agencies
• Creating a Roadmap for Success in a Down Economy 
• Tactics for Surviving & Thriving
• When the Going Gets Tough – What Options do you have? Merge? Liquidate?

During the discussion period, there were two specific areas that we covered in great detail, 1) creating an action plan, and 2) cutting out clients that are not profitable:

Create a Measurable Action Plan – For many agencies, placement volumes have risen dramatically while liquidation rates are down. That means it’s not “business as usual” for most firms.  I strongly recommend that you sit down with your management team and write out your plan to adapt your business model. Block out a few hours in the morning/evening with your most recent monthly P&L and Balance Sheet and start developing a plan to cut costs, change or renegotiate vendor relationships and cut underperforming staff.  Work with your managers to put together a 3-5 page summary along with a financial plan for the agency going forward.  The key to a successful plan is to engage management and get their complete buy-in to change.

Cutting out Clients that are Not Profitable – It is important to continually evaluate whether your clients are profitable by looking at the contribution margin by each of your clients. Many of the off-the-shelf software platforms have programs for you to input fixed and variable expenses associated with a particular client and also help you determine an appropriate corporate allocation to input into the model.  Like any model, it is only as good as what you put into it!

As we approach the summer months, now is the time to increase your operational efficiencies. Hold your people accountable for the decisions they make!

Are you changing your business strategy due to the current market conditions? I look forward to hearing your feedback/commentary.  

By the way, if you are looking for a speaker at your next ACA unit meeting or you are just looking for fresh content for your newsletters, please let us know.  Check out our previous presentations and articles we have written.

Michael Lamm advises owners on their growth and exit strategies for Kaulkin Ginsberg’s Strategic Advisory team. Michael can be reached directly at 240-499-3808 or by email.

Kaulkin Ginsberg is a sister company of insideARM.com.