New Year?s Resolutions for the ARM Industry

It’s the first week of January, and I have some New Year’s Resolutions: eat better, exercise more and increase my net worth.  Are yours the same?

If so, these resolutions are similar to those made every January by most Americans.  Research shows that about half of the adults in this country make New Year’s Resolutions, and that the majority of these commitments involve better health (lose weight, exercise more, eat better, quit smoking) and better finances (save money, invest better, get out of debt).  

This has got me thinking about New Year’s Resolutions for the ARM industry.  As an advisor working with owners and executives in the industry, I’m fortunate to hear first hand how companies are approaching 2010 differently than they approached 2009.  

I have found that many of these professional resolutions for the new year are not unlike the personal resolutions we make in the first week of January.

Exercise more
Our businesses can likely do more with what’s already at our disposal.  We tend to discuss business changes in this industry in terms of major company events, such as M&A, new partnerships, new investments, etc.  While these are important, owners and executives in this industry mostly work on more immediate changes to their businesses.  We can exercise our existing management teams, collectors and resources more diligently to make our companies stronger in 2010.

Eat better
Working all accounts, like eating everything that crosses your plate, will be unhealthy this year (as it has been in past years).  The upside of working the most collectible accounts will be even higher this year than it was in past years.  When unemployment starts to decline, lift will come most to the companies that know how to pursue the right accounts.  New technology solutions are available to make this differentiation possible.   

Get on the scale
Improving performance is unlikely without the right metrics, and without using those metrics in the right way.  We need to measure success based on key performance indicators that fit, and do so frequently enough to make this process worthwhile.  Quantify, measure, review, improve and repeat.

Quit smoking
Like personal habits, operational habits are hard to break, even those bad habits that we recognize but have been unable to fix.  After reviewing your operations and identifying areas for improvement, have the gumption to make changes that will last.  We have seen companies fail to make identified improvements year after year, decreasing the overall health of their businesses in the process.

Invest better
Our balance sheets likely do not look the same at the end of 2009 than they did at the end of 2007.  Investments in equipment, people and (importantly) business processes obviously need to be based on some form of cash flow.  As we describe the ROI of our own services to existing and potential clients, we must do a better job measuring the ROI of investments in our own businesses, and we should not shrink from investing (if possible) when the ROI of doing so is high.

Get out of debt
Let’s welcome the desire of the American consumer to settle overdue debts at the beginning of the first quarter.  Raise a glass to the first quarter!  At the same time, let’s look at our own balance sheets and our own ability to service debt payments.  Running a business with debt on the balance sheet can be like driving a car with the emergency brake on.  We want our companies to be nimble, and this may require some changes to our balance sheets.  

Research shows that after six months, fewer than half the people who have made New Year’s Resolutions have stuck with them.  After a year, this figure declines to 10 percent!  Interestingly, success in keeping resolutions increases with the number of people we include in the process – an argument, as always, for involving our management teams and peers intimately in our plans for change.

Here’s to a year in which consumers stay committed to debt reduction — and in which ARM owners and executives stay committed to running their businesses according to resolutions they have established for the year.

As Director at Kaulkin Ginsberg, Paul works with credit issuers, agency owners, and industry executives to assess and improve accounts receivable management strategies and operations. Contact Paul at 240-499-3818, or by email.