Some aspects of managing in a volatile environment, such as focusing on operational efficiency and staying liquid, are givens. But more important are the abilities to scale up and down and reconfigure resources rapidly.  

As a Business Strategy Consultant and Top Executive Coach I find these are issues that are constantly debated. 

Scaling up and down quickly requires a renewed focus on the break-even point of your business. What is that point? Can you get to 30%-40% of plant utilisation? 

Converting fixed costs into variable costs is the key to achieving a low break-even point. Examine the following:

• Do you need to own your own premises?
• Can you do a sale or lease back?
• What about your vehicles – can they also be leased? 
• Do you need your own warehouse and delivery system? 
• How many of your internal functions can you outsource to free up capital? 

A few other rules of thumb combine to provide the first line of defence against a volatile market place:

• Don’t allow any one customer to contribute more than 5% of revenues (lowers the risk on your business and ensures no single customer can hold you to ransom)
• Draw customers from diverse sectors
• Ensure you have a robust account management system 

In the service industry cross-training of employees in many different skills is the new norm, to cope with the constant changes in customer demands; the same applies in many other industries. This requires an arsenal of training programmes and regular testing of employees but, assuming employees learn quickly, the payoff is the ability to respond rapidly to change. 

As Jack Welch observes, “In this volatile world, more and more companies are striving to become ‘Velcro organizations’ in which people and capacity can be rearranged and recombined creatively and quickly without major structural change.” 

To find out how you and your business can become more agile – and to enquire about my availability as a keynote speaker – you can email me on richard.bosworth@whatifspecialist.com, Follow me on Twitter at www.twitter.com/richardwhatif or connect with me on LinkedIn under Richard Bosworth.