Business will come back.
As shows reschedule, events go live, and AV expertise is needed again, will your company be ready to scale?
The current way of doing things in most AV businesses hasn’t set us up to scale easily. We’ve inherited some bad habits from our AV forefathers that drastically diminish our effectiveness. As these habits become more ingrained, we enter into what I call The Event Production Death Spiral. No matter where you start, as you move around the spiral, business operations worsen.
It might look like this:
- The bench shrinks because you don’t hire freelancers. Or maybe you don’t have a reliable pool of workers to pull from.
- Rather than cultivate a better pool of freelancers, you compensate by using techs to prep their own shows.
- Techs send extra gear and “pack their own parachutes.” In doing so, they take equipment that wasn’t accounted for.
- With all your staff out on showsite, the warehouse is never tidied up.
- Since items aren’t put back and extra equipment was pulled, sales people don’t see actual availability.
- They can’t sell to capacity because they think you’re too busy to do another show.
- Lack of sales results in poor cash flow.
- You sell on price because you’re trying to make up for losses.
- When you sell on price, everyone is billable. After all, you’re trying to recover your overhead costs for all of the full-time techs.
- You don’t hire freelancers because you want to save money and your bench shrinks even more, forcing you to repeat the cycle.
In this unscalable model, each negative point worsens because urgency increases.
We counter this negative spiral with practices that make us scalable. And now, in our forced reset, we have the chance to move to an overall more scalable model of operations.
3 Keys to Increasing Your Scalability
Scalability is the secret to growth and profit. In order to take your business to the next level and meet demands in a more efficient and lucrative way, you must know your customers, costs, and capacity.
Know Your Customers
Who are your future customers and how can you best meet their needs? To most effectively operate your business, you must understand your pipeline and realistically forecast future jobs. Sales people are supposed to stay positive and believe they’ll win the bid every time, but that’s not realistic. You need to identify what conversations will turn into money, and what’s just a pipe dream. Only then can you be ready to meet customer needs.
One primary customer need is flexibility. Customers are people — which means they’re not a static element in the equation. They don’t ask for the same things every time. Be ready to think on your feet, answer their questions, and present your capabilities in flexible ways.
That doesn’t mean every order should be fully customized. If we know our customers and understand their needs, we can create kits and systems to better meet those needs. Right now, too many of us sell from a bottomless pit of customized services that we configure to any customer request. If this is how you operate, you don’t understand your customers. If you understood your customers, you could design products and services in packaged ways that make it easier to sell, budget, and buy.
Think of yourself like a chef. Chefs don’t create fully customized meals for every customer. Instead, they create a menu. You know your ingredients — how can you craft a menu to offer customers great options that will satisfy their needs?
Know Your Costs
Manage your costs by tightening the reins on what is purchased by whom. Purchase order compliance is critical. Right now, we’re all struggling with cash flow. We cannot make exceptions for purchases outside of necessity. Purchase orders provide a way to record our financial obligations so we can calculate it in our cash flow projections. Outlier purchases are simply unacceptable.
Central purchasing helps significantly with P.O. compliance. If you’ve just downsized your company, you’ve already started this process. If you put one person (or one small group) in charge of buying, you’ll negotiate better, make fewer mistakes, and have a clearer record of costs which will help you better calculate your margin for customer pricing.
You also need to know where and when to find outside resources. Your busy times are also your competitors’ busy times. This means you must predict outsourcing needs and make deals in advance. Know the price of outsourced labor and equipment, then look ahead at your resource projections so you can supplement accordingly.
Know Your Capacity
To be scalable, you have to have a firm grasp on your equipment, budget, and staff. What will you run out of… and when?
Most AV companies run out of people before we run out of gear. A schedule helps us keep close tabs on both and outsource accordingly. Plan ahead for when you’ll need to outsource equipment or hire freelancers.
In order to execute those plans, you have to create and work from a budget for the entire fiscal year. It’s difficult to create cash flow statements without a budget that projects your monthly costs and revenue.
Knowing your customers, costs, and capacity is an essential part of effective business operations. When you have a solid grasp of these components, you can unleash your business to sell beyond your capacity and make money in ways you didn’t anticipate.
How To Master Capacity NOW
When business picks up again, you need to be ready — because we’ll all get busy at the same time. People who master capacity first (and best) will have an advantage over everyone else.
Here’s what needs to change now so you can master capacity from now on:
1. Don’t put off vital tasks.
You said you were going to take advantage of this extra time to organize the warehouse, clean up, or work on inventory.
This list is comprised of tasks you should have done already. You were waiting for downtime. Now that it’s forced upon you, get it done. After this is over, never let these tasks fall in importance again.
2. Give projects a clearly defined end.
Close out all future projects. No more project piles. No bin of cables to be repaired. No stack of equipment not checked in. At the end of the day, everything should be clear. You should be running the type of operation that finalizes a real end to every project.
3. Aim for a Zero State.
Zero State gives us the shortest paths to prepped and de-prepped states on every job. Too many people end the day with, “All equipment is checked in. Let’s leave the rest and finish tomorrow.”
No. That’s not Zero State. That’s “I ran out of time.”
If we keep up with our equipment, inventory, and organization, we’ll be more efficient and get more work done.
4. Protect open floor space.
Open floor space is one of the most indispensable tools you have in your operation. Protect it at all costs. No matter how much space you have, you probably need 2x-4x as much. We grossly underestimate how much open floor space we need to efficiently turn our business. If we commit to open floor space, we’ll make tough decisions about getting rid of the junk that’s lying around.
It’s time to apply the same mentality that makes us successful at shows (deadlines!) to our internal operations. It’s time to clean up shop — both in your warehouse and in your operations structure. When business returns, be ready to work from a business model that’s more scalable and therefore more profitable.
For more on models of operations, creating readiness systems, and scaling up, check out the full Week 7 (April 29) webinar replay of our weekly series: The Show Will Go On — Business Survival Series, now extended through June 3.
Sign up now and you’ll be registered for the entire series. You’ll also gain access to all replays of the previous webinars.REGISTER NOW