3 Ways to Scale Your Business in a Recession

Best practices are just that: things you do because they work well. It doesn't make sense to do things that harm your bottom line.

In a boom market, you often have the luxury of being able to get away with a certain amount of slack.

Unfortunately, like many bad habits, running fast and loose with your business can sink you when the market softens up. Best business practices are things you should be doing all the time, not just when you need to tighten your belt.

Provided that you've taken a good look at your processes and scaled them to fit your situation, focusing on these three key areas will help you stay afloat.

Standardize All Processes

I sound like a broken record when I say this, but it's true: everything you do, from design to install to programming, should be done the same way every time.

The only thing "custom" about "custom install" should be the minor details in any given job. Especially with regard to system design, laying out every job according to a standard template will save you huge amounts of time and money.

A standard process for jobs results in less head scratching and getting more jobs done on schedule and on budget. The job may even get done under budget, which is even better.

Tighten Labor Efficiency

Managing your labor efficiency is closely related to the first tip. It's a thankless, but critical task.

I was just reading a study on motor vehicle service departments, since it can be valuable to learn lessons from other industries. While operating at 100 percent efficiency (as measured by hours billed less wages paid) is probably unattainable, profitable service departments operate at between 45-55 percent efficiency.

By contrast, despite being "busy," service departments operating at an average of 28 percent efficiency were hemorrhaging money.

I'm just starting to take a closer look at the CI business from this perspective, but you can start evaluating your own company's labor efficiency right now.

Stick to the Receivables Policy

A common thread in small companies that have failed or are struggling is that they were lax on collecting money they were owed.

You need to be fair with deposits, but you also need to collect enough to get cracking on the client's job.

With progress payments, the contract with your client needs to be explicit about the terms required for work to proceed.

Crystal clear communication up front, and as the job progresses, will prevent disagreements. If there is a dispute, having your ducks in a row will help you find a resolution.

Doing a bunch of work up front for free and then getting stiffed because you didn't take care of your end of things isn't a good business model.

Take stock of how your company does business and make changes if you need to. If you take care of things right now, you'll have a better chance of being around later.

Lee Distad is a freelance CEDIA Certified Professional Designer who offers design and process consultation to firms in the Custom Installation industry, as well as copy writing and other professional writing services. Lee’s business and industry blog can be read at http://www.leedistad.com