There is a widespread growth of pessimism and skepticism in people due to the rising hurdles the businesses and organizations are facing today.
Organizations, big or small experience challenges from both internal and external forces. Internally, employees fear about attrition and slow growth, how the sales figures are dropping and externally, the market is turbulent and never steady so there are continuous and massive changes in market needs. To add on to the misery, there are restrictions posed by the government and additional regulations that have made markets volatile and uncertain.
We see small and medium businesses swirling in this tempest of uncertainty and the winds are not on their side.
So, what can we do to steer clear of the disaster looming ahead?
It’s human nature to respond with either a swim or sink instinct. Here is what happens. Some people ignore the storm. They believe that it will pass and there is nothing they can do about it than to endure the damage that it comes with. Some people will deny the very existence of the storm. Some people become helpless and in the panic, they sink and perish. But there are some tough sailors that make it through the storm because they took needed actions.
There are few things we can do to solve such disturbances. Obviously ignoring them will not solve them. So, the first thing to be done is to take action.
Any successful running business can be put in autopilot mode, with proper systems, practices, and processes. Well managed businesses enjoy this smooth flight until there is turbulence where the real trouble begins. Then, the business has to disengage the autopilot and take control.
Consider these few tips on how to sail through the storm, how to navigate your businesses through the challenging times and also how to recession-proof your business. There are seven things you can do in lean times.
1. Deal with facts not fiction.
It’s important to filter the fact from the fiction. Us humans love whining about a problem more than solving it. Sometimes, people get scared about the situation. Then, this fear gets amplified and they are constantly fed with messages and news to add on to the drama, making them helpless in this situation. First of all, one shouldn’t try to make it worse than what it already it. Panic and paranoia is good only to the extent where it can be used as a catalyst to produce actions and not to drown in it. So, it’s better to stay away from more bad news about the economy. You don’t need to consume it regularly and get sucked into a negative spiral. Newspapers usually spark up blood pressures along the whole office even if there’s one article about the market crashing. (Nassim Nicholas Taleb, author of Black Swan was one of the first ones to lay down the ill effects of swallowing newspapers and how it is actually a futile exercise which is toxic for your body.)
Be smart about the information you get. Get the facts right. Once we do that, we need to get to work. Prepare your scenarios based on likely probabilities and create a contingency plan to protect your business from any unforeseen challenges.
2. Do intelligent cost cutting
So, we need to figure out a way to move out of the tempest. When the sales are dwindling and you are losing money, you need to find ways to cut costs that do not hurt your business. The typical cost-cutting approach by large companies in hard times is to deploy a wide sweeping cost reduction policy which by many survey McKinsey have proven that it is not useful until the cause is targeted. It’s like campaigning to save extinct animals but not contributing in combating climate change. Stupid, right? But, usually companies fall into this cliched response. Companies employ the first level of strategic agility by doing cost management by making arbitrary cuts. It’s a dramatic approach in response to a crisis or anticipated crisis. Here, cutting costs means being discretionary with expenses and demandinghead count reductions across the board. But, they don’t realise that they are cutting costs without tackling the underlying causes which isoften a short-lived solution.
Costs have a nasty habit of growing back. According to John R Wells, a Professor of Management Practice in the Strategy Unit at Harvard Business School,“Savings promised by the majority of cost reduction program disappear within two years, never delivering the returns required to justify the high price paid for them.”Tweet
For small business, cost-cutting needs to be implemented with caution. The purpose of cutting cost is to manage cash flow. As long as your business exists, you will have expensesand the harder the times get, the harder it can be to keep the cash flowing in.
In lean times, many small businesses make the mistake of cutting their marketing budget to the minimum or even eliminating it entirely. But, this is exactly when it is needed the most. You don’t cut deep on your marketing expense as there is a high possibility that if you go too deep, you’ll drown.
What you should do is avoid wasteful expenditure in your marketing. If you can’t directly understand how that marketing strategy brings you a return, don’t spend. Marketing is effective only when it’s repetitive and extensive. You cannot really rely on word of mouth forever and expect other people to do your job while you keep the big bucks to yourself.
Some people say that “Half of their marketing spend is a total waste but they don’t know which half.”Tweet
To be careful with money means having a system in place for measurement, ROI and other matrix in places. Creating a data dashboard that is routinely updated will reveal trends and forecasts that can help you to gain first-moveradvantage of opportunities or brace you for tough times. But, the wiser thing to do with money when you have less of it left is to use effective marketing mediums to boost sales.
By improving operational efficiency, reducing inventory costs without sacrificing the quality of goods or inconvenience to customers, you can cut costs on long term.
It’s also wise to apply the 80/20 rule to understand what is working and what is not working in every area of your business.
3. Use crisis as a turning point, or as a breakthrough
Every breakthrough is preceded by a breakdown. In every adversity there lies the seeds of benefit. The traditional Chinese word for “crisis” is composed oftwo Chinese characters signifying “danger” and “opportunity”. When you combine problems and opportunities, you get pro-bortunity. Times of distress and occasional struggles are symbolically ‘wake up calls’. This is the time to ponder, think, strategize and innovate.
Tough times invite us to step out of our comfort zone. It makes us do the difficult things. Courage is most needed in times of fear, uncertainty and hopelessness.Tweet
Tough times make us short term optimists. Short-term optimists have a deadline for things to fall into place. And if nothing happens in that time span of time, they turn out to be pessimists. Long-term optimists have a strong belief that no matter what happens every time after they fail, everything will fall into place as long as they are game.
If you are the captain of the ship and when you are amidst a storm, all hands on deck expect their captain to take charge. Everybody is counting on you. People need to believe that you have what it takes to sail through the storm. They expect their leaders to be bold enough to take serious action or to do something about solving problems.
Creating a breakthrough requires a mindset to use every adversity as an opportunity.Tweet
The gift of every adversity is the opportunity that it unveils.
Look at the flipside and use the unfavorable situation to rethink your business. Tough times are crossroads in your business and they provide an opportunity to sit back, sip up some juice and finally reflect what works for your company and what does not. Like how Motorola’s implementation of Six Sigma brought them back in the game when they were barely making it neck to neck with Japanese competition. So, a challenging situation can bring companies into the point of evolution or extinction. How you evolve and change during lean times determines your long-term success.
You need to be prepared for new things. When what you are doing is not working, it’s time to change course.
Tough times are the times for reinvention and changes. It’s time to unlearn and learn new things. This calls for learning new tricks in the book through seminars, online training, mentoring, coaching, etc and really whatever it takes to move ahead, rather than being stuck in time. To do this, you need to invest time and money on yourself.
Remember your future success will come from a better version of you and not from better circumstances.Tweet
4. Put your focus on four things: your people, your company, your customers and your competition
People tend panic when the going gets tough. Employees hear about lay offs, instability in job security and lack of appraisals and get scared out of their wits. When there is uncertainty, people tend to be less committed and this makes things worse for companies as employees start looking for a back door exit. Research also indicates that competent employees are prone to looking for other employment during bad times. Bad times are not the time to abandon your people. It’s the time to keep the right people closer and give them the assured faith in the management as great things in a business is not done by one person, they’re done with a team of people.
Secondly, you need to focus more on customers. You lose more customers in bad times than in good timesand thereis a reason for that. When times are tough, many businesses tend to actually stop servicing their existing and loyal customers. A depressed mood descends upon the business like dark clouds enveloping the sky and this in turn resultsin poor customer service. Your ray of sunshine could be slapping a smile across your faces and doing your best. In tough times, you need to get closer to your customers. Always remember that they are also facing the dip. Don’t abandon the people who built your business in bad times.
Thirdly, the focus must also be on your business. Your business is like a goose that lays the golden eggs for you. The goose goes hungrier during bad times. It demands more resources to stay afloat. You need to feed the golden goose. In tough times,you’ll want more eggs but be cautious or else, you might end upkilling it. Instead, take extra care of your goose. This is the best time to invest in your business. It is time to renovate it, give it a fresh coat of paint like upgrade the website, come up with a new corporate image, train your staff, invest in new technology and really anything else that will make your business look more impressive and attract more customers like a moth to a flame.
Finally, your focus must also be on your competition. Here when I mean competition, it’s not only the companies that offer similar products and services but also other forces like technology, changes in business models, and changes in the way customers satisfy their needs with other alternatives. Watch out and observe the ecosystem closely. When some thing is depreciating somewhere, something somewhere is also getting appreciated. Watch out and be vigilant about the changes in your industry and make the necessary changes before your “friendly” neighbourhood companies snatch the prize and make a run for it.
5. Get help
Asking for help in tough times is not a sign of weakness but of smartness.Tweet
Tough times demand you to seek help from others. When your existing resources are not sufficient enough for you to thrive, you need to get help from other resources. Find a mentor or a coach or consultant who can help you guide through the mist. To gain clarity, you need external perspectives to see problems clearly and to craft solutions differently. You need to get resourceful and seek out and find all kinds of resources to meet your expected outcome whether itis advice, direction, training, finance, technology, etc. Get all the support necessary to get ahead. It’s also the best time to build relationships.
6. Step up to leadership
In good times, businesses run by itself. It consumes less energy and effort. In bad times businesses need a push. When times are great, everyone’s a hero. When times are tough, only great leaders step forward.
Throughout history, we have witnessed that tough times breed great leaders. Being a great leader is all about having the will to rise to the occasion especially during difficult times. Look at leaders like Mahatma Gandhi, Martin Luther King, Abraham Lincoln, Joan of Arc, Winston Churchill. Look at how Martin Luther King voiced the free will of the people and became one with them to fight against what wasn’t right. These people navigated others in troubled times and helped them to get to the shore.
Whether you are employer or an employee, tough times calls for everyone to step up and make things right for the company. It’s an opportunity to prove that you can be dependable and you will not abandon your followers during lean times.Tweet
7. Play offensive.
When you are faced with challenges, it’s human instinct to conserve, hibernate and to protect what you have. This sets in an attitude of playing the defensive game, which is playing to not loose.
Don’t let tough times stop you from the fight. You have to play offensive and get more aggressive to win the market.Tweet
When sales figures are dropping, the scenario is that your sales personnel will get discouraged and your dealers will feel demotivated. Instead of expected results, more excuses will be generated and accepted. Instead of whining aboutthe problem and playing the blame game, you need to really focus on solutions. When things are not working, it’s an indication to play the game with better planned out strategies. In panic and chaos, businesses get experimental and every failure is taken as a sign to do nothing further. Instead of breeding helplessness, creative thinking, idea generations, collaborations, smart executions must be encouraged to solve problems differently.