Managing in Difficult Times
Ignoring or avoiding a difficult business environment is simply not possible. It will happen, sooner or later.
A credit crisis, stock market meltdown, or a looming recession all affect the attitudes and actions of consumers, employees, investors, lenders and business managers. What are some helpful ideas to respond effectively?
Stay focused
Avoid being distracted by the bombardment of bad news.
Stay focused on customers and employees, especially the ones that you have and want to keep. Don’t freeze. But don’t over-react. Be calm, rational, reassuring and pro-active.
Don’t just share the pain, provide relief. Misery may love company, but everybody still remains miserable if you just talk about it and do nothing. Try to be more creative and take appropriate action. Don’t neglect the good news; look for the silver lining in the dark clouds – maybe currency exchange and interest rates are down temporarily, so now you can expedite foreign currency sales or re-finance some lending to improve cash flow.
Be relevant
Take a close look at your customers’ changing needs and your product or service offerings. Do you have recession proof products or are they vulnerable? Costumers will be postponing or redirecting their purchase decisions in the current challenging climate. Can you keep their business with a new cost-reduced service or a more creative approach to packaging, pricing, terms and conditions?
Leverage the sense of urgency
Nobody is unaware of the current economic circumstances affecting your business. Employees are already aware of the issues and the problems in front of them, so it will be easier to get them to accept the solutions. That means it’s more likely that they are receptive to expense reductions, removing frills, postponing projects, reducing assets and conserving cash. It may be opportune to revise compensation or bonus plans, change distribution channels, move marketing programs to lower cost online approaches.
Take advantage of the sense of urgency that exists. Now is the time to resolve lingering problems; just be cautious not to do permanent damage to key employee, customer and supplier relationships that you want to retain.
Recognize the changing environment
You probably started the year under different assumptions that affected corporate budgets and business plans. Sales targets may now be unrealistic and should be adjusted downwards to maintain the rewards and motivation for top performers who continue to deliver in spite of challenging times. Try to use an external benchmark to justify the adjustment and not give the impression that you are forgiving poor performance.
Look for opportunities generated by the crisis
If you have been smart enough to stash cash and build a relatively secure business, then you can take advantage of some unique opportunities that exist. Build your team by attracting top performing employees who may be ready to move from shaky competitors into your welcoming arms. Or buy out a competitor, if the company is suddenly for sale at a bargain price. The big boys are doing it; so can you.
Talk to your banker
Make sure she is not worrying unnecessarily. Or at least worrying for the right reasons and hearing them directly from you.
If you are in better shape than most and credit is available, then increase your credit limits now to handle the potential unexpected impacts and to support the new opportunities you may want to pursue.
Avoid being the unwilling prey
Recognize that competitors may also see you in difficulty and seize the opportunity to raid key employees or buy you out at a distressed price. You need to keep close to your key employees and ensure their career plans remain with you. If you are a likely target for merger or acquisition, then start working on your choice of preferred partner and determine your business valuation under normal circumstances, not current crisis conditions. Then take the initiative before you lose control of the situation. You and your business will be better for it.
In summary:
Be brave, be flexible, be creative.
Analyze, decide, take action.