Working capital is king...

During a crisis, cash is king. To have it or not to have it can create a huge difference as far as the probability of a company surviving is concerned. The question is: how can I generate cash in the short and medium term?

The answer lies in the optimisation of your working capital.

• The first measure to implement is to have a look at your production business and get rid of all the assets that do not generate value (machines lying unused, parts never to be sold that can be scraped, buildings that could be rented,...).
  The second measure is to increase the productivity of the employees to decrease the production lead time and thus have less materials blocked in the process.
• The third measure is to equilibrate your production chain to get rid of the semi-finished goods.
• The fourth measure is surely to pay your suppliers later and try to get money from your customers by offering attractive conditions.

All of these measures have to be implemented as soon as possible to save cash. Remember, cash is king. Do not hesitate to contact us to discuss this subject in more details.

Road police force in Bulgaria

Not really my core competence will you say. Although it has a lot to do with productivity. I do not know if you have noticed (for those of you who travel abroad), that the Bulgarian police force is notably unproductive. During the last 23 years of driving probably 200.000 KM in Western Europe and America, I have been controlled less than 10 times. During the last 3 years I spent in Bulgaria, I have had on average 1 control per week, although I have driven less than 50.000 KM.

The role of a police force should be to prevent offenders to commit crime. It should concentrate on the crimes that have the most uggly consequences as its ressources are limited (due to the fact that nobody wants to pay tax, let us say, to prevent car drivers to drive with a speed of 51 KM if the speed limit is 50 KM).

In Bulgaria the opposite seems to hold true. Road police forces do only check misbehaviors in the places where the misbehaviors have the least uggly consequences. For example, they almost daily check drivers on the road from Sofia to Pleven after the bridge where the speed limitation applies (which means after that the uggly consequences of an accident on the bridge would have happen) or 10 meters before the end of a village, after the pedestrians have been killed.

By acting so, they reinforce the feeling of the normal drivers that road regulations are not here to prevent accidents, but to allow the state to collect taxes (and of course as we all know, the taxes are not collected for the state, but for other purposes).

The salaries of this police forces are pretty low, but their very low productivity and efficiency still generates huge costs for the tax payers. On one side, there are the unnecessary salaries, on the other the huge costs in terms of accidents and ruined lifes.

Interestingly, the police force seems to act like many quality control departments that can be found in typical Bulgarian companies. They check the quality after the products have been produced and eliminate the bad quality products. And of course, if the production director of the company thinks that the products are all good, then there will be no defects.

The role of the quality management department should be to make sure that bad quality products are not produced. Similarly the role of the road police force is to eduquate the drivers to make sure that accidents do not happen.

When will you start the revolution and force your politicians to act? This unproductivity is financed via your taxes and deducted from the money available to finance your school system and your economic development. You live in a democracy, not in a police state.

I would be deligthed to get your feedback.

Crisis, which crisis??

The question can indeed be asked for Bulgaria. I would have expected that the crisis would start, driven by the local real estate market collapse. I was wrong, at least for the time being. This should not really be a reason for consolation.

Indeed, the crisis that has started in America and spread to the world is in itself much more serious. The crisis of the real estate industry would have had a limited impact on other industries. An international slowdown will affect and is already affecting most of the exporting companies and most of their suppliers.

A dramatic order reduction of sometimes 30% to 40% leaves few survival strategies open, especially if the management is concurrently pressed to increase the salaries of the employees by 20% to 30% and if the gas prices increases by 20% to 40%.

To drive cost down and thus increase productivity is actually the only possible strategy. Productivity levels of 30% and non value-added activities cannot be tolerated any longer, should you want your company to survive this recession.

Do not lose time looking for excuses not to act, act now, so that you can save enough cash to survive the drought. Do not hesitate to call us if you want to establish a check-up of your company, we are the only consulting company in Bulgaria advising large and small businesses on productivity and restructuring.