Standing Still is Not an Option
The best way to sum up a strategy for success in this economy is the old, familiar saying, "When the going gets tough, the tough get going." A business slowdown can be faced by the indifference that there is little you can do that will make a difference. It is true that your actions alone will not change the world, but someone in this uncertainty will succeed and it may as well be you.
Businesses always experience change - moving in or out of crisis, coping with shortages or surplus - things never stay the same. Every time you get to the point that seems right, something changes, and again you are faced with a new challenge.
As a business owner, you cannot wait for the economy to recover or wait for the government to fix the situation. You need to take action that will result in bottom-line results. Here are some ideas and suggestions to find success - even in a challenging economy:
Commit to your business. Employees, vendors and customers can tell when a business owner is looking for an exit of selling the business or closing it. Your feelings and thoughts are transmitted to all to read.
Concentrate on your business and what you can do to make it successful. Chances are that your business is not on Wall Street and Congress is not giving you a bailout. Your goal is to be a top business in your industry, not the one liquidating inventory. Every industry is impacted and what matters to you is not what someone else is doing but the actions you need to take to succeed.
Get information and analysis quickly. You cannot set your course in the dark based on last year's historical comparison. Focus on what your industry is doing, who is making it happen and how. Understand potential scenarios for success and have plans for contingencies.
Know your business risk in today's market. Risk has shifted in the current economy. From customers canceling orders, vendors not being able to perform, or your bank or insurance company changing terms, it is critical that you understand your business risk. Continue to re-visit this issue as financial conditions change.
Understand your costs and cash positions. You will face changes in your business that were not imaginable just months ago. Many businesses are looking at break-even analysis, considering significant cost cuts and determining the lowest product price to cover direct costs with no or little return. This is not a long-term strategy but one you may consider to keep your core group working.
Find quick wins that will improve your business and morale. Business owners who create a sense of desperation or panic will lose lines, employees and customers. Examine your business and determine where you can win - it might be a new advertising piece, a change in focus, or a new product. Take the right action steps to have long-term results.
Improve your deliverables to your customer base. The level of service you provide customers creates confidence that you are in business not just today but for the future. Make sure your team is trained on how to deliver your product and leave the customer with a positive image of your business.
Consider partnering with other businesses to gain an advantage in today's market. You will need to be fast and agile in your decision making and actions. Fierce competitors may be willing to collaborate on advertising, delivery services, or volume buying to gain a cost advantage. Be open to opportunities to position your business to gain the advantage.
Sales, profit and costs are the mantra for success. Make sure your team understands the relationship of these factors, and their role to increase sales and control costs, and the impact on the customer. Foster a culture of caring about the customer - deliver the best possible product or service, and make sure your customers are taken care of so they return for future business.
Cash is the lifeblood of your business. If you have relied on borrowing in the past, make sure your bank still wants your business and that you are seen as creditworthy. Credit terms in your business may need to be reviewed and changed to meet current conditions.
Lead your business from the top down demonstrating that you set the pace, and that there are no exceptions, even for you. Given the size and scale of current challenges, your taking charge will show the stakeholders in your business community that your business will be successful and will survive and thrive.
I recently saw a sign placed in a business' window: "Due to budget cuts, the light at the end of the tunnel is being turned off." While humorous and somewhat telling, you want to make sure your customers get the message that you are taking action, and that you will be open for business now and in the future.
Henry Ford said "most people spend more time and energy going around problems than in trying to solve them." Don't be afraid to face your challenges, take action and ensure your business will continue and flourish.
By Joseph P. Leverich, CPA
Copyright | Leverich Group
Joseph P. Leverich, CPA, is managing partner and president of Leverich Group, a large Salt Lake-based CPA and management consulting firm. Prior to establishing his own accounting practice, Joe worked for a national CPA firm working in places like Alaska, New York, Texas and throughout the Southwest. He writes a monthly newspaper column for The Enterprise in Salt Lake City and recently completed a three-year Owner President Manager program at Harvard Business School. Joe welcomes your comments or questions at [email protected] or (801) 364-4949. You can visit Leverich Group's website at https://www.leverich.com/ .