Business Strategies for Tough Economic Times
For many organizations, the long shadow cast by stock market turmoil and economic recession has replaced the rosy glow and giddy expansion boom of recent years with a nervous pallor of uncertainty. Not all businesses are hurting, by any means, but most are feeling at least a bit feverish at the thought of what might continue to be in store. If yours is one of them, here are some strategies to help you navigate through tough economic times.
Listen Before You Cut
Trimming expenses may very well be necessary, but where should you cut? Before you decide, form a cost reduction task force. Larger organizations may need to appoint a formal committee for this, but most businesses can accomplish the same thing just by really listening to employees. The people in the trenches know where the fat is. Ask them. By doing so, you'll not only discover cost-cutting measures you hadn't even thought of, you'll also achieve more buy-in for belt tightening. Dieting is, after all, always easier if we at least get to help choose the menu.
Apply the Customer Value Rule
When deciding which overhead costs to trim; another valuable tip is that the rule for overhead is to apply the question: "Does it add customer value?" If it does, think twice before you swing that knife. Instead, get aggressive about improving your purchasing procedures. Make better buying decisions in all areas of your operation. Get new bids from suppliers, change vendors if necessary, barter, and consider banding together with other businesses to make cost-saving bulk purchases.
Fix the Leaks
When times are good, it's easy to overlook the problems caused by letting things slide. If invoices 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. Can you really afford not to fix the leaks? Consider Outsourcing Are there tasks that could be accomplished more cost effectively by outsiders? Could outsourcing free up more of your staff's time for mission- enhancing activities? Is there an income stream you're missing out on because you don't have enough people to market/operate it? It's time to take a look at new possibilities.
Remove the Blocks
Most organizations have layers of bureaucracy that impede the flow of ideas and slow down the approval process. If yours is one of them, 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. Get Out of the Bunker If you're not already doing it, this is the time when you must get out from behind the desk and concentrate on building and nurturing relationships. Meet face to face with important customers and your business advisors, become active in community groups, cultivate new contacts -- and network with local business people. Hearing the strategies they're using to cope may help you develop even more of your own.
Step Up Marketing, Don't Cut It
Marketing is often the first thing to be cut when money gets tight. But that's a mistake. This is the time when you need to increase your marketing efforts, not eliminate them. Instead, put your money where it counts. Spend your money on results-oriented marketing materials, not image building. Four-color brochures, expensive annual reports, elegant stationery and dazzling store packaging are great for building your image -- and for draining your recession-era budget. When dollars are tight, it's more important to concentrate on creativity and effective calls to action. And while you're at it, consider doing rack cards instead of brochures and using more postcards and self-mailers.
"When You Run Out of Red, Use Blue"
Pablo Picasso had the right idea. There are always solutions -- even in tough economic times. The trick to finding them is being willing to look for them, and being flexible enough to adopt them when you do. Contact us to discuss your business performance, cash flow, cost controls and other strategies that can benefit your bottom line results.
