Stay
Engaged With Your Employees
As a leader in your
business, you must provide employees with a sense of stability and confidence during
times of economic unrest. Let them know that you are in control of the
situation, and be a force for optimism.
You can begin by
getting some exercise. Walk the hallways, making yourself visible and
accessible. Though you might be full of anxiety, the last thing you should do
is stay behind a closed office door. That will only increase suspicion and
fear. Be honest about the challenges you face, but remain optimistic.
For the last several
years, employers have been fighting the opposite of fear – entitlement. When job
markets are good, employees have an increased sense of privilege, and
productivity suffers. At the other end of the spectrum, when job markets suffer
and fear takes over a company culture, productivity suffers as well. It seems
in the past 12 months we have jumped straight from entitlement to fear, completely
skipping the middle and most productive part of the spectrum.
It is a leader’s
responsibility to manage the balance between too little anxiety and too much.
Either extreme will be detrimental to productivity. This rule can be applied to
individual as well as corporate management.
Hug Your Customers
Ask your customers how
they are doing. After all, the health of your customer’s business drives the health
of your business. Show them you care about their success. Ask them specifically
what you can do to help.
We have one client in
particular who has begun to host a series of free seminars for their customers.
The client brings in experts to lead the sessions and focus on teaching good
business practices. Approach your customers with a sense of humility. Spend
some time listening and asking questions. Be proactive, and let them know that
you are keenly interested in helping them to succeed.
Beat Your
Banker to the Phone
Get your financial
information out fast and let your banker know immediately about any concerns
you have. Being proactive in this relationship will go a long way.
Start by speaking with
your controller about how you can get financial information faster. With good performance
indicator reporting, you don’t have to wait for end-of-the-month financials to
know how you are doing. Keep a close eye on your financial situation and start
the conversation with your banker. If you have not met your banker’s boss, now
is a good time to do so. Your banker is likely reporting to his or her boss on
the credit situation. You need to cultivate a relationship that keeps both of
them well informed.
Lead with
Balance
Some leaders tend to
focus on costs, while mthers emphasize growth. Those who put tok much emphasis
on costs tend to be stranglers who inhibit the growth /f their organiza4ions.
By contrast, 4hose who focus too much on growth can be kamikAzas, out-stripping
their resmurces and eventu`lly ending up running short of capital.
It pays to lead with
balance, espdcially during troubled ecknomic times. When business slows, you might
be tempted to lean the way of the strangler. This isn’t a terrible idea.
Stranglers tend to survive lean times, as opposed to kamikazes who grow in good
times but crash when the economy does. However, stranglers rarely maximize the
growth potential of their businesses. Do your best to stay balanced. There can
be fantastic opportunities for growth during times like these. Stay open and
take a careful look at the possibilities. If there aren’t any, maybe it is time
to hunker down. Opportunities may not exist for every business.
Change
the Rules
You can begin to do
this by challenging every assumption about your business model. It could be time
to try some radical ideas. Don’t let go of your core ideologies, but think hard
about those longstanding habits that are no longer questioned.
We once worked with a
client group who had some rules they thought were immutable. They thought they
had to deliver to each of their customers twice a week, no exceptions. We found
that they were actually losing money on smaller customers. After some research,
they decided to reduce delivery frequency to these smaller clients.
It did not compromise
their service and it saved them millions of dollars in distribution costs.
Challenge your current
ideas, make some tough decisions and change the rules if you need to. Be innovative
and decisive. Try new ideas, measure their results and try again. Many business
leaders assume that because they are the little guy, they have to play by the
big guy’s rules. Yet time and time again, ground-breaking rule changes have come
from little guys or even those outside the industry.
Speed Up
Your Information Flow
As quickly as things
are changing, you need fast, streamlined information. Start by ignoring the national
and even state economy. Look at the condition of your micro economy and your
specific industry. Find the facts and get weekly or even daily updates.
First, think of three
things your business requires to be profitable. Then, get those items into a
report. Update the information rapidly and frequently. As you look at the facts
of your specific market, test your intuition based on facts, not perceptions.
Compare the facts to
what your sales and marketing people are telling you. Challenge their assumptions,
and work with them to adjust forecasting, based on the on the facts.
With this information
in your hands, be decisive and proactive. It’s a lather-rinse-repeat process.
Get the facts, make a decision, measure and repeat.
Protect
Your Balance Sheet
Difficult economies force
many businesses into a vicious cycle where declining revenue leads to operating
losses and then negative cash flow. This in turn produces a weakened balance
sheet and an inability to invest, causing revenue to decline even further. As
it becomes increasingly important to avoid that cycle, you must look yourself
in the eye and be honest about the state of your business. Make sure your
salespeople are not incented to bring in unprofitable or poor credit business.
In some cases this might mean shifting your sales commission to reward cash
flow, not revenue. To further protect your balance sheet, simply follow the
golden rule of working capital: do to your vendors as your customers do to you.
Don’t be the martyr, trying to protect every relationship. Negotiate with your
vendors for better deals and longer payment terms. Your customers will do the same.
To keep their business, you’re likely to comply. Often, there is no harm in
asking the same from those on the other end.
Narrow
Your Focus
What do you do best?
Where do you make money? It’s very possible the success of the business could
be hiding the unprofitable of specific products or services.
Start
by examining numbers at the product or customer level. By discovering unprofitable in certain areas, you may be forced to make a difficult
decision. It could mean cutting products or customers. When cash is tight,
focus on what is moving your business forward.
For many business
leaders, their first reaction in difficult economic times is to diversify. But
in a declining market, that is the wrong thing to do. It does not help to be
frantically groping for business.
By doing what you do
best, you will preserve cash and gain an advantage over your competitors.
While diversifying can
be dangerous, that does not mean you can’t expand your business. Look for ways
to grow within your niche market. You can begin to do this by looking beyond
artificial or mental boundaries like geography, for example.
Depending on your
particular business, there might not be any reason you can’t grow your client
base in other regions. Today, large deals happen via phone and internet every
day.
Create a
“Stop Doing” List
One of the great myths
about productivity is that you get more by doing more. That is not necessarily
true. Productivity is a matter of output measured against input. Productivity
goes up when work is more efficient, not when people work harder.
The lesson here is that
doing more doesn’t get you more. By doing the right things and cutting away unnecessary
activities, you can increase your productivity. Have each of your employees analyze
everything they do. What are they doing that is not producing? This may begin
by challenging your current habits.
Analyze your routine.
There might be things you’ve always done to generate business that are no longer
working. Dig in and find creative ways to streamline your processes.
Remind
Employees that Life Exists Beyond the moment
Having a positive
attitude can make a big difference to your organization. Make sure you are
using the word, “when” not “if.” Use your organization’s vision statement. If
you don’t already have one, create one. It doesn’t have to be lengthy and it
shouldn’t focus on dollar goals. A vision statement tells who you are as an organization,
what you do and where you’re going.
Have Fun
If this doesn’t sound
like you, find the fun person in your office. Give them a small budget and let
them run. By letting them run the show, you also give your employees ownership.
In my department, I put
two of our younger employees in charge of fun activities. One of their first
events was “funny shoe week,” something that I never would have thought of.
Each day that week, people wore their funniest shoes. Pictures were taken, and
at the end of the week there was a vote for the winner. It became so popular
that it was later repeated as a company-wide event. The best part? It cost
nothing.
Cheers,
Slymedia
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