If you own a business, some recent workdays may have gone like this: You bolt awake, grab the financial section of the paper, and turn on your TV to get the latest worrisome financial news. Once you make it to work, you lock yourself in your office to study your company’s financial projections for the next few months, worrying over every worst-case scenario. Well, it’s time for the hand-wringing to stop, and the smart thinking to begin.
Just the word “recession” can send business owners into a panic. Add in all of the economic postulating by the media, and you might think it’s time to start counting down the days until your business’s demise. But all of that worrying is counterproductive.
The business owners who make it through an economic downturn are those who use their time to improve the business and seize every opportunity. Play your cards right and you may even come out more prosperous than before.
Making it through this slowdown won’t be a piece of cake for anyone, but if you know the best steps to take, you will be able to come out on the other side with a very sound business.
Here are a few tips for steering your way through.
1. In business, only the strong survive.
During a downturn, many business owners forget that their competitors are suffering too and that the playing field is still level. Therefore, your basic strategy for prospering should not change. Build the strongest business you can. That means having a strong value proposition, being fiscally responsible, and providing great service to get and keep customers. Don’t let the hype about the slowdown distract you from those tenets.
2. Use the hype to focus your employees.
In the right hands, the fear-inducing hype can be a great motivator. The slowdown creates a momentary unifying factor — something that lets employees set aside their individual concerns and rally around a common cause. Use the economy to stress that providing quality service and being more efficient are the best ways to help the business. The challenge is for you, as the leader, to resist being overcome by fear, and to present a vision of prosperity that everyone will embrace.
3. Expand; don’t contract.
Great companies expand during slowdowns; they don’t pull back. Remember, competitors are dealing with the same challenges. The weakest will go out of business, losing funding, cutting operations, and letting go of assets and people. All of these things open up holes in the market that you can fill. You want to be there to snatch up the customers of your failed competitors. Be prepared to increase your sales, marketing, and advertising efforts to make sure newly available customers reach out to you first.
4. Figure out what tough times mean for your customers.
Your customers are probably suffering, too. The faster you realize that, the quicker you can meet their needs. Look at your organization from the customers’ perspective and make sure every part of the organization is treating customers right. Go the extra mile, even if that means spending extra money, to reach out to your biggest and best customers. Meet their expectations and keep communication open. That way, if you find out they’re planning to break off relations, you can do something about it before it’s too late.
5. Know the difference between profit and revenue.
In some organizations, it’s hard to tell which customers, products, services, or geographic areas provide the most profit. Plain financial statements do nothing to help you identify unprofitable customers or segments that can be cut. During a slowdown, look at this more closely. At some point you may need to cut costs, and the first places to cut should be those areas where you are already losing money.
6. Stay current and creative. A better tomorrow will come.
Too often during a slowdown, companies cut back on the new products or services that represent their future. When the slowdown ends, they can’t catch back up to market demands and expectations. So they fail while the market is actually turning around. Avoid this trap. Keep your creative juices flowing. Always think about new ways to serve customers and what new products will enable you to better meet their needs.
The words “economic downturn” don’t have to mean only bad news. If you manage correctly, taking care of your employees and customers, you can make it through stronger than ever before.
