Even in the relatively healthy business climate of San Antonio, some folks are describing their business to me with a mournful look and “The economy, you know.” It’s the current shorthand for ” I’m losing money and I’m doing nothing about it.”
Just two months ago a business owner told me that his company was still “recovering.” When I asked “From what?” he looked at me mournfully and spoke in a quiet voice, the kind you use in funeral homes, where I guess you’re afraid of waking the dead. “Why, from nine-eleven, of course.”
Wow! He has managed to maintain his excuse from one downturn to the next, without having to acknowledge the boom that went in between. At least he isn’t confusing his (few) employees with a mixed message.
Small businesses do not have the resources to “ride out” a recession. As an owner, you are the most dependable resource in your arsenal. Here are a few things you should be doing.
1. Plan. If you don’t have a written business plan, start writing one now. The planning process will force you to think through the strengths and weaknesses of your business, and identify the opportunities and threats that could vastly improve or damage your company. Luck is preparation meeting opportunity, and volatile times offer the chance of experiencing great luck.
2. Manage to the profit line. In good times, we get lazy. Revenues grow 15%, profits increase only 10%, and we are happy. Tough times call for a ruthless focus on profitability. Decide that a failure to make an appropriate return is just not an option, and be relentless in your commitment to it.
3. Start topgrading. This recession has put 600,000 potential new employees on the street in January alone. Identify the ideal skills and behaviors that you would like to see in a better employee. Mentally inventory your current staff for weak links that could be replaced. Clearly define positions and duties so that new hires can be integrated quickly. Make sure that your company remains visible to job seeking candidates.
4. Keep your powder dry. Cash is your primary resource in a downturn. It gives you the power and flexibility to grab opportunities and survive disasters. Hoard your cash; the more, the better.
5. Know your numbers. If you haven’t defined key performance indicators for your company, do it now. Know which factors mean the most to your success and stay on top of them.
6. Increase your horizon. What are the leading indicators for your business or industry? What is happening today that will impact your business 3, 6 or 12 months down the road? The Internet allows you access to unlimited information. Find where you’re leading indicators are tracked and bookmark it for frequent reference. Give yourself a reminder to visit it often.
7. Monitor your competitors. Competition heats up in times of scarcity. Some of your rivals will change their tactics, and could surprise you. Others are weak and can be acquired or eliminated altogether, with a little push at the right time. Have regular conversations with your customers and vendors about what they see your competition doing. Train your employees to watch events in the field and report back to you.
The seven tactics don’t define everything that you need to do, but if you’re executing all seven, you’ll be positioned to outrun the competitors who are in front of the bear with you.