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INVESTING DURING TIMES OF CRISIS (PART 2)

The last time I wrote a blog with the title above we were still suffering the business setbacks that came with the COVID 19 pandemic.  That was clearly the worst crisis our country had faced in decades and our clients had to make serious decisions about how to weather it. Not everyone agrees that the situation brought on by the tariff “wars” constitute a real-world crisis, but most do agree that serious business people have to plan ahead for the turmoil that may come.

At very least business owners fear their margins may change and/or they may be forced to charge more for their products. A couple of days ago I was watching a business program featuring an interview with a brewery owner in Ashville, North Carolina. One of his lines of business was canned specialty beers which he shipped nationwide. The aluminum used to make the cans shipped from outside the USA and a potential tariff was imminent, he feared. The interviewer asked if he would simply pass the cost difference along to the consumer. His response, “I can’t”. That’s one approach. Suck it up, try to exist on lower margins and hope things improve.

On the same program another brewer faced the same problem but elected to “pivot”. He decided to ride out the tariff wars, deemphasize the canned products and focus on his popular craft beers sold locally in the tourist friendly areas around Ashville. The foreign packaging materials therefore became less of a problem and the focus shifted to service levels.

Right in our own backyard we have a client who is a heavy equipment manufacturer who is dependent on components from Canada. Similar components can be purchased from Europe but not the United States. In this case our client certainly can’t pivot or quickly find a new line of business. He will either need to stand pat from a margin perspective, as did our first example above, or pass at least some of the cost along to his buyers.  But at the very least, the cost of the tariff impacts his cost of goods whether passed along or not. ACUMEN assisted his finance team on how to account for the new expense in SAP Business One.

As you know, ACUMEN Corporation provides business management systems and commensurate consulting to manufacturers and distributors across the nation. One truth is, no matter what the business climate, you can’t manage what you can’t measure. Modern ERP systems such as SAP Business One are designed to allow business owners and their teams to provide the data they need to make intelligent choices.  This allows them to either pivot (and even create a new line of business) or take the necessary steps to stay the course, either absorbing increased costs or sharing them with their customers.

Moreover, the analytical tools in today’s systems allow discerning business people to do the necessary “what if” pre-planning to make the correct decision for their businesses. That’s why, just as it was during the pandemic, many businesses choose to invest in their business systems during times of crisis or turmoil rather than cutback.

Here’s an excerpt from my pandemic crisis blog:

“One of our clients told me that the pandemic forced her to look at her business plan more critically and make corrections where necessary. It also caused her to reach out to all of her clients and members of her particular supply chain more frequently. The discourse built her confidence that things would eventually improve. So, investments in new technology were made and she now reports an uptick in sales. I’m sure her trading partners saw that she was not prepared to go down without a fight. It was inspiring.”

So, in her case, a combination of looking at her business plan using the data and analytical tools available in her SAP system allowed her to tweak her business plan. She invested rather than curtailed technology spending by adding additional customer service reps (and corresponding workstations) and boosting personal service levels. She opened communication channels with her customers and stayed the course. I’m happy to report her business is flourishing today.

Facing down the pandemic wasn’t for the faint of heart. I admit to my moments of doubt. I suspect this next stretch could be equally challenging. But good businesses find ways to stay the course, even when that means making strategic investments.

Remember, as you fine-tune your strategies and help revitalize your part of the supply chain, don’t hesitate to reach out to ACUMEN Corporation if only to open up a dialogue about ways to strengthen and streamline your business.  If you are impacted by the added costs of tariffs, we will share how our client above handled it in SAP Business One. Whether working to right-size your inventory or automate time-consuming processes, we’ve faced similar goals many, many times before and may be able to help. We’re as close as the phone.

Chip Lowell , our VP of Business Development and Client Care
can be reached  at 804-323-0467, ext. 214, or email us at LetsTalk@ACUMENcorp.com.