The Upside of the Economic Downturn
The recent financial news has left many business owners panicked, anxious, and perhaps mentally writing their company’s obituary. Chin up, says David Giannetto: You can actually use the economic downturn to create a better organization. Giannetto, director of Cohn Consulting Group’s Enterprise Performance Management Practice and co-author of The Performance Power Grid: The Proven Method to Create and Sustain Superior Organizational Performance, offers six rules for strengthening your business in tough times.
1. ONLY THE STRONG SURVIVE
During an economic downturn, many business owners overlook the fact that their competitors are suffering too—and the result is an even playing field. Therefore, your business strategy shouldn’t change. And that means having a strong value proposition, managing in a fiscally responsible manner, and providing great service.
2. USE THE HYPE TO FOCUS YOUR EMPLOYEES
The slowdown creates a “momentary unifying factor”—something that enables each employee to set aside individual concerns and rally around a greater common cause. Use the economy to drive home the fact that providing quality service and creating efficiencies are the absolute best ways for employees to help the business through any kind of recession. The challenge is for you to present a vision and path toward greater prosperity that everyone in your organization will rally around.
3. EXPAND; DON’T CONTRACT
All competitors in an industry are dealing with the same challenges. As a result, the weakest of these organizations may go out of business, cut operations, and/or let go of assets and people. All of these things open up holes in the market that a clearthinking organization can fill. Be prepared to increase your sales and marketing efforts to make sure that newly “available” customers reach out to you first.
4. FIGURE OUT WHAT THE DOWNTURN MEANS FOR YOUR CUSTOMERS
Your customers are making tough decisions about what to spend their limited funds on, and what they can afford to give up. Reach out to your best customers and keep lines of 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 many organizations, financial statements of gain and loss do nothing to help you make hard decisions about where to cut unprofitable customers or segments, and where you shouldn’t. During a slowdown, apply greater scrutiny in these areas. Then, if you need to cut costs, do so where you are already losing money.
6. STAY CURRENT AND CREATIVE
Don’t cut back on the new products or services that represent the future of your business. Otherwise, once the slowdown turns around—as it inevitably will—you’ll find that you can’t catch up to market demands and expectations. Avoid falling into this trap. Keep your creative juices flowing—especially during a down period. Always be thinking about new ways to satisfy your customers and which new products will enable you to better meet their companies’ needs.
