SUCDRI

As a corporate finance specialist, including many stints as a liquidator and turnaround specialist, I have had the luxury of hearing a large number of successful businessmen and women speak about how they succeeded in changing market conditions. One such speaker…and I hope I am crediting it correctly, was Graeme Hart who spoke of his SUCDRI strategy.

The key focus of this strategy is to maximise profitability by increasing revenue and reducing expenses, while also limiting capital expenditures including investments in inventory.  At first glance, a strategy of  Sales Up, Costs Down, and Reduce Investment seems common sense professionally but this one has stood out over the years to me.

As the author of thousands of company valuations where founders are surprised to discover their (sometimes) decades of hard work is worth less than they expected, the primary goal of SUCDRI is to drive higher maintainable earnings, which are a key driver of company valuations. This is because investors and analysts typically place a higher value on companies with strong earnings growth and predictability, rather than simply relying on the strength of a company's balance sheet. 

In order to implement the SUCDRI strategy, businesses need to focus on several key areas. First, they need to develop a plan for increasing sales. This might involve expanding into new markets, launching new products or services, or investing in marketing and advertising campaigns. By increasing revenue, companies can improve their bottom line and create a more sustainable business model.

At the same time, businesses need to focus on reducing costs wherever possible. This might involve negotiating better prices with suppliers, implementing more efficient production methods, or reducing staffing levels. By reducing expenses, companies can improve their profit margins and increase their earnings potential.

Finally, businesses need to limit their investments in capital expenditures, such as new equipment or facilities. This can help to conserve cash and improve liquidity, which can be especially important during times of economic uncertainty.

Overall, the SUCDRI strategy is a powerful tool for driving higher maintainable earnings and improving company valuations. By focusing on sales growth, cost reduction, and investment restraint, businesses can create a more sustainable business model that is better positioned for long-term success.

If you want to have a chat about what opportunities there are in changing market conditions, talk to one of the professionals at Fusion Business Consultants or our partners at Emprise. 

Changing market conditions

Operating in a market suffering from higher costs and customer defaults can be challenging for businesses of all sizes. However, there are strategies that companies can adopt to manage these difficulties and maintain profitability.

One of the most important steps a business can take is to closely monitor costs and identify areas where expenses can be reduced. This may involve renegotiating contracts with suppliers, finding more efficient production methods, or reducing staffing levels. It's important to strike a balance between reducing costs and maintaining quality, as cutting corners can ultimately harm a company's reputation and profitability.

Another strategy is to implement more stringent credit controls to reduce the risk of customer defaults. This may involve conducting credit checks on new customers, setting credit limits, and enforcing stricter payment terms. It's also important to stay on top of overdue accounts and take appropriate action to collect outstanding debts. While these measures may seem restrictive, they can help to protect a company's cash flow and reduce the impact of customer defaults.

Businesses may also consider diversifying their product or service offerings to minimize the impact of market fluctuations. For example, a company that primarily sells luxury goods may also offer more affordable options to appeal to a wider range of customers. This can help to maintain sales even if some customers are unable to afford the more expensive products.

Finally, it's essential to stay on top of market trends and adapt to changing conditions. This may involve investing in new technologies or exploring new markets. By staying flexible and responsive, businesses can remain competitive and maintain profitability even in challenging market conditions.

In summary, operating in a market suffering from higher costs and customer defaults requires careful management and strategic planning. By closely monitoring costs, implementing credit controls, diversifying offerings, and staying flexible, businesses can navigate these challenges and maintain profitability.

Tradie embarking on a big contract project

Hi Team,

Thought I'd post about a great software program which is amazing at mapping out the cost and activities on big constructions.  Over the years I have worked on doing project cashflow, costing and profitability modelling on large construction projects and even some smaller ones myself.  During this time I have tried a number of project management tools to improve that analysis and frustratingly relied on Excel spreadsheets with complicated formulas and multiple tabs which were helpful at a certain point of time but often were difficult to continually update with ever changing variables.

I recently came across software called Co-Construct which is more suited to larger projects.  I have included a link to a demo on how this software can improve your project intelligence and speed to submit estimates to get big contract jobs. This software is available to plug into Xero to be included in your budgeting and reporting processes.

The great thing is this software can be used from estimating and submitting proposals, pricing and monitoring sub-contractors, and reporting on the overall profitability of a job. 

http://global.co-construct.com/how-it-works/

Here at Fusion, we are all about using our experience to introduce the latest technology to save your precious time and give you the business insights to make your projects more profitable.

Fusion is live!

Refer your friends here and get 1-month free on Xero when they sign up. 

Welcome to the new Fusion website! 

Fusion stemmed from the overwhelming response I have experienced through my client referrals. 

On that note, I would like to sincerely thank all of my clients. Getting to understand your business challenges, needs and aspirations has helped me shape Fusion and I look forward to bringing you services that will further enhance and help to grow your business.

G