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Hold on to your best people
In any tough times, the wage bill comes under severe scrutiny. But try not to lay off your best people. As business wisdom dictates, the most vital and valuable resource in your business is your people and you should hang on to them – even if that means taking a short-term financial hit.
Be adaptable
Flexibility is one of the key elements of survival. If an aspect of your business isn’t working or an idea didn’t work out, then move on – don’t be wedded to the past, learn from it. This can occasionally mean changing your business entirely.
One great example of this is Flickr, the online photo-sharing site that its founders sold to Yahoo! for around $45 million. Flickr actually began as an online game called “Game Neverending”, which included a small photo-sharing feature. When its founders saw that the photo sharing was more popular than the game itself, they shifted the focus of the company – and ended up millionaires.
Keep a careful eye on the cashflow
Cashflow is something that always concerns businesses (or should), but in a downturn it can make the difference between survival and failure. Although sometimes you can’t control when your customers will pay you, predicting if there’s likely to be a problem well in advance will help. Always plan ahead. If you’re finding that people pay late consistently, build this into your forecasts – don’t rely on fantasy figures.
Avail yourself of any help you can from the bank
It’s in the interests of the bank for you to survive and prosper, and even when there’s a credit crunch they are willing to help – as long as your business is fundamentally sound. The key to a good relationship with the bank is to talk to them early if you know there are going to be any problems – don’t wait until the last minute, as this will suggest to them that you’re not planning your business properly.
Try and accumulate a cash reserve
As a family, you want to have some cash saved up for a rainy day – and the same is true of your business. Of course, the start of a downturn shouldn’t be the point at which you think about having some cash reserves, but if you want to plan for the future, it’s a great idea. Even large companies often have a lot of cash on hand in short-term investments
Improve efficiency
Again, improving efficiency is something that any company should look to do at all times – but in a downturn, it becomes even more important. Here, there are lessons that businesses can learn from the Japanese, who have a concept called muda – activity which is wasteful. This concept has formed the basis of ways of examining the processes used in business, to identify elements which are inefficient. This can then lead to improvements. It certainly served the now almost-legendary Toyota Production System. Learning how to reduce waste in production through systems like this can help you bring greater efficiency to your business.
Market aggressively
Even in a downturn, customers spend money – what changes is the amount. If the market you are in is shrinking, then the obvious way to protect your revenues is to grab a bigger slice of the pie, and that means ensuring that potential customers are fully-served by your products, and fully-aware of what your key advantages are. This means marketing more aggressively than ever before.
The first thing to do is take a step back and look at what your customers need and want. Re-evaluate your products or services in the light of this – are there simple tweaks you can make to what you offer which will make it more attractive? Next, look again at the messages that you’re conveying to the customer. Are value-led messages now more attractive? Review the effectiveness of every kind of communication, and hone them to make them work better.
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