Over the past couple of months as the oil price has plummeted and the economic outlook has changed, I have talked to a lot of people – including business owners and market place experts – listened to, and read many media reports all related to what the recent drop in oil prices means for Calgary’s businesses. That said, I think the most pertinent report I have heard yet was just this past week on the radio station CHQR.
Paraphrasing, the reporter went on to say that in his opinion, “no one really knows how long this down turn will last, nor when we rebound to what levels we will rebound.” The reporter went on to say that Albertans have enjoyed a very good run economically over the past several years, but perhaps when we do rebound, it just may not be to the economic levels we have previously seen.
The intent of this blog article is NOT to give my two cents as to when, why, and to what levels we will rebound, but to give you, the business owner, my perspective on how best to deal with the times we find ourselves.
9 Management Tips for Business Growth:
- Be a strong leader. There is a saying, “If it doesn’t kill you, it will make you stronger.” Now more than ever, you need to step up to the plate and be a strong leader in your company. Show your team that in times of possible adversity you will not back down but fight even harder. Strong leadership is the key to success, in good times and bad. Take a position of strength and your attitude and spirit will inspire your team to perform strongly as well.
- Recognize this is likely not forever. Slower economic times have happened before and will, in fact, happen again. If you recognize this, you can relax and prepare for the good times that will happen in the future. The better you can position your company to survive and do well in difficult times, the better chance you have of flourishing when these difficult times fade away.
- Do NOT just think about ‘cost cutting’ measures. Costs, in themselves, are drivers of profit; you need to spend money to make money. A strategy of simple cost cutting will leave you unable to compete.
That being said, you DO NEED to focus closely on where you are spending your money.
- Think about strategies that will grow the top line of your income statement. It is not impossible to increase your revenues or sales even when the economy is in weaker shape. I’ve seen it happen first hand.
Remember that revenues are a function of both volume and transaction size. Think of ways to maintain volume but also devise strategies for increasing it, all the while trying to increase your average transaction value. The good news is that these strategies don’t have to cost a lot of money.
- Do NOT simply slash your prices to gain sales. In the long term, the only companies that can survive and do well with a price-cutting strategy are those that have the absolute lowest cost structure. Chances are you do NOT have the lowest cost structure and will fail if you try to use this strategy.
Lowering prices is a very hard strategy to implement successfully, so think carefully about the long-term implications and get good advice before doing it.
- Size up your entire company. When was the last time you looked at your organization chart, employees’ job descriptions, business processes, and employee activities? It’s probably been a while. If you want to stay on top, take the time now to conduct a thorough analysis of everything in your business, from sales to marketing to process to accounting.
Are there ways you can reduce inefficiencies in your business that could save you some expense? I am not suggesting you blindly fire your employees, not at all. But perhaps you can alter some processes or activities that eliminate one extra part-time position. You never know. Be creative and think outside the box.
- Revisit your marketing plan. And if you don’t actually have a written marketing plan, now is the time for your business to develop one.
Creating a marketing plan won’t cost you a lot of money, either. There are many books and resources on low-cost marketing activities and they will work if these activities are appropriate for your business, designed properly, and implemented consistently.
- Customer service, customer service, customer service. If you want to survive and thrive in a recession, you must remember your customers are the lifeblood of your business. Determine the life value of your customers; it should inspire you to service your customers better than you have ever done in the past.
Successful businesses understand the saying, “Under promise and over deliver.” Take it from me, if you do not treat your customers like kings and queens during this period, you are giving them excuses to shop elsewhere.
- Pay closer attention to your numbers. During uncertain times it is vitally important to know your numbers and what they mean to the success of your business. Understand what products, services, customers, and business segments make you money and which ones do not. Then focus on activities that will generate the most profit.
Remember, though, that profit is not a guarantee of cash flow so ensure your company is implementing activities that will optimize its cash flow. In the best of times, increased profits without cash flow are simply a slow death. In recessionary times, growing your profits without growing your cash flow could mean the end of your company before you know it.