5 Things to Do When Times Are Tough
When the business environment is becoming harder, here are 5 strategies to help you focus your effort, time, resources and investment.
Every few years the business cycle turns down and things get tough. For good business people, this is a sign to get going because with competitors struggling, it is a great time to build your business. There are two key areas you need to focus on, your survival and your growth. This paper outlines just five things you must do to make the best out of the general business downturn. Follow the suggestions made and you will not only survive, you will prosper.
1. CASH FLOW
Cash is the lifeblood of every business. You need to get as much cash as you can into the business and protect it once you have it.
- Where do you have cash stored? It may be with your customers who are slow in paying you. It may be in overheads that you don’t need. It may be in assets that you don’t really need to own.
- If you had to get some money within 30 days, how much could you get in if you really put all your effort into it?
- Look at the cash going out of your business. Can you stop spending in any areas? Can you slow down the speed at which it goes out?
2. RETAIN YOUR PEOPLE
In most businesses that employ people you have a third of your staff that you are lucky to have, a third you would do be better without and the remaining third are somewhere in-between. In tough times you must protect your best people, the top two-thirds (maybe you need to get rid of the bottom third?).
- How can you make sure you keep the ones you need?
- Do they have contracts?
- Do you reward them?
- Do you tell them how much you appreciate their efforts?
- Is working with you fun?
3. RETAIN YOUR CUSTOMERS
Keeping your best customers is much like keeping your best employees. Work out who the top two-thirds are and spend time on them.
- Find out what problems they are having and what you can do to help them.
- Keep in close contact with them on what you are doing for them.
- Thank them for their business; ask if they can give more business.
- Do they have any friends who they can refer you to?
- Are you linking your best people with your best customers?
- How can you help your customer increase their business?
4. IMPROVE YOUR PROFIT
Cash and profit are closely related. Around 20-30% of your operational expenses are due to waste in your business. You could remove that waste and the savings become instant profit (and probably cash).
- Can you reduce your overheads? What about your people and material costs?
- If by law you had to double your profit within three months what would you do? Why not just do it anyway?
- Do you really know what profit you make each year? What about each month? What about each day?
- Where do you make your profit? Did you know that 20% of your customers and 20% of your products (and services) generates 80% of your profit? Why not just focus on these customers and products for the next six months?
5. MAINTAIN YOUR ENERGY
When you are energized your business is energized. You must develop and guard your energy levels.
- Are you fit?
- Do you love what you do?
- Are the people you work with fun to be with or are they energy vampires?
- Do you work too hard?
- Do you make time for yourself?
Time management is the biggest thing to address in tough times. 20% of what you do generates 80% of the benefit you are to your business (and family) so what are you doing for the rest of the time? Maybe if you stop doing some of the low-value stuff, you will boost your energy levels.
Getting your business under control is critical in tough times. There is no point in growing a business that does not have good cash flow, profit or leadership. Get these five things largely right and your business will grow. Every leader and every business is different, so you need to decide where to start. All five strategies are equally important and the need for discipline and accountability for them lies with everyone – the responsibility is yours, it is up to you to make it happen.
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