It seems like every company is heavily into cost cutting and layoffs as a means to turn around their business in these economic times. In fact, many turnaround leaders are financially oriented and focus on stripping out costs. They leave the bare bones and the company continues to operate, apparently profitable, in the short term. Unfortunately, many companies are left weak, unbalanced and defenseless to further market changes or competitive moves. They ultimately struggle and fail. Recessions have a way of weeding out the weaker companies. On the flip side, if you do things right, you can come out of the recession a lot stronger than your competition with more customers and more opportunity. Here are some best practices ideas that will enable you to win now and even more so when the market changes to be more positive. The key is to play to win, not just survive.
1. Understand the Opportunity
Business is about competition in meeting your customer’s needs. To succeed, you have to do things better than your competitors. In recessions, companies tend to lose focus on everything but cutting costs. Among other things, they stop thinking about customer satisfaction, which obviously leads to customer dissatisfaction. This gives you the opportunity to capture market share. To keep your customers satisfied, you must continue to deliver great products and services. Focus on your customers. They are probably hurting too and want your attention and leadership. They will remember you when things turn around. And if your competitors have let their relationships slip, the customers will certainly remember that too.
2. Playing to win means having a winning plan
Many business leaders measure their success by how hard they work and whether there is enough money to cover payroll. That’s not enough, particularly in tough times. You have to have a solid plan that is working and is known and understood throughout the company. Re-examine it and make certain that it is built on the right fundamentals. You may be surprised at the opportunities that will be presented. Most organizations have layers of bureaucracy that impede the flow of ideas and slow down the approval process. Remove as many of those blocks as you can so that your organization is able to react quickly when new developments or changing trends warrant. Prioritize projects that address core business goals to avoid knee-jerk reactions to cutting expenses like headcount reduction.
3. Upgrade the team
People build businesses. Good people build strong businesses. Recessions free up people with extraordinary talents. Either they have been caught in large scale RIFs and are looking for opportunities or they are left after a RIF and are no longer doing what they do best, as other jobs have been laid on top of them. Seek them out and hire them. Up grade your talent. This is the opportunity to get “A” players. You may actually be able to decrease your payroll in this current economy. Teams with strong benches win in the long term.
A second point is to use downtime to build skills. A recession can result in less work for your staff. They may end up spending more time on lower priority jobs. Give them the opportunity to use their downtime to increase their skills. Although training is expensive, it’s not nearly as expensive as losing good employees. When the projects come back, those employees will be able to do them better and quicker, creating opportunity and saving you money in the long run.
4. Engaging Your Customers
Get out of the bunker. Everyone is “hunkering” down and turning inward looking for excess. This is the time when you must get out from behind the desk and concentrate on building and nurturing relationships. Go and see your customers face to face and get an in-depth understanding of their situation and how you can be of assistance to them. This doesn’t mean giving everything away, but rather finding opportunities to help them and in turn help you.
Make your employees customer-centric. Make them ready to engage the customer when there are contact opportunities. Everyone must be in “sales”. Too often the customer is viewed as a nuisance and their demands are unreasonable. While that may be true, they also pay the bills, so help your organization understand and meet their needs. A lot of business campaigns fail not because the message doesn't get out, but because it doesn't get "in." Before you launch any new marketing initiative, be certain that everyone in your organization knows about it, understands their role in it, and realizes the importance of that role. Poor internal communication is bad marketing practice in any economy, but in tough times it can be devastating.
5. Focus on what is vital today.
Your business plan must be built on your core competencies and prioritize projects that will have an impact today. This is making sure that you do what is important and do it most cost effectively. Find new and different ways to achieve the results at lower costs. Many businesses just cut. This causes revenue problems, now and in the future. Simplify something. It will help cut costs. Complexity equals expense. Operate with a bootstrap mentality. Capital is going to be hard to find and “cash is king”. This is where having the best people with creative minds will really pay off. The one caveat is to keep an investment in R&D since it is the lifeline to the future. But make certain that your projects are focused and tightly controlled.
6. Out-Thinking Your Competition
A recession tests business models. Many of your competitors will be scrambling to cut costs and then regain their balance. You can have a greater plan. Anywhere in the world, basic needs of people remain the same, but people are cutting their spending. This demands more cost effective solutions. How can you provide better value than ever before? How can you meet these basic needs? How can you reach more people without increasing expenses? You have to become more efficient and effective, finding creative ways of supporting the business. If you are able to optimize your new value proposition, you can secure an increased share of wallet and market that will pay off in both the short and long term.
Here are three ideas:
* Do a lot of little things right. The tendency in tough times is to search for the one magic bullet that will make everything better. But magic bullets are hard to come by. Most positive turn-arounds come about as the result of finding a number of small solutions, not one big one.
* Fix the leaks. When times are good, it's easy to overlook the problems caused by letting things slide. If mailings aren't done on time, if data entry gets behind, so what? When cash flow is sufficient, the income leaks these practices create just seem like trickles. It's not until times get tight that we realize we've actually created gushers. Stop the leaks and save the cash.
* Selectively, step up your marketing by doing more of what works best. Marketing is often the first to be cut when money gets tight. However, studies have shown that in previous recessions, companies that kept their marketing focus came out ahead. The key is to do this selectively by focusing on what works best. Do an in-depth analysis of your programs and focus on the top ones. When times are tight, it often makes more sense to replicate than it does to reinvent.
7. Get some help.
Invest in someone short term who can help you navigate through these tough times and keep your business profitable. Hire a good consultant. Their experience and objectivity can show you ways to accelerate your positive business progress. The ROI can be astounding.
Let us know how we can help.
Maver Management Group