7 Tips To Boost Your Business in a Down Economy
Listening to the news and many CEOs, you would think the country is in a depression. At a minimum, these reports put listeners into a depression. While I’m willing to let a few individual businesses slide because of what they do (e.g. residential real estate in Miami), if your company is not growing the way you want it to, and/or margins are shrinking, the problem is inside your company. If you believe otherwise, you are deceiving yourself. In many cases, even in sectors where the group as a whole is doing poorly, you should still be able to do better than you’re doing. Just like Warren Buffet does in the stock market, you need to jump on opportunities when the market is down and be aggressive, not defensive.
Some great examples:
- I recently met with the Managing Partner of a mid-sized accounting firm who confided in me that he just came off a record year and did not believe his company could sustain the pace. He was already seeing a slowdown. However, one of his competitors, who also is my client, is having another record organic growth year.
- In the fitness and health industry, many companies see a drop off in memberships and attribute it to people spending less on “extras.” I have a client whose year-over-year growth this summer was 49%, and gross margins have expanded as well.
- Another client of mine has a business that services the airline industry. You would think they would be doomed. Yet based on their order backlog, they expect 33% growth this year.
- Staffing industry executives tell me their industry is down 30%, and many are laying off staff and otherwise cutting costs “until things get better.” I know of one company in the same market that entered the staffing business and in the last 2 years. They are growing in the high double digits and opening offices in several new states, having identified and pursued a segment of the staffing industry that is booming.
- The owner of an insurance company experienced a decrease in revenue last year and is expecting another decline this year. Meanwhile, I work with a competitor that is tracking organic growth of over 50% this year.
The initial secret of success for the above four companies is the executive team’s attitude about how they see the marketplace. When the market gets tough, that’s when a management team needs to be aggressive. Top CEOs know that the best opportunities present themselves when competitors are weak. Right now, your competitors are weak. They are focusing on costs. This defensive approach can kill a business. It usually starts with staff reductions. If the company does not get lucky in short order, it becomes vulnerable in 4 ways:
- Many companies release quality talent. Research shows that 1 top performer produces the value of 3 average employees.
- They reduce staff in the areas that are most important to servicing clients, causing a decline in customer satisfaction. Be very careful when reducing positions that interface directly with your customers or affect customer satisfaction. This will have a dramatic affect on their loyalty to your company and will make them vulnerable to your competition.
- They stop investing significant time and money in strategic planning and research and development. This failure to innovate and take advantage of new market opportunities results in not seeing that customer needs have changed. For example, anything you can do to help reduce energy costs for business is a huge opportunity right now. If your competitor can add this on to their offering, you will lose your customer.
- They extend intervals for maintaining equipment, have people working too many hours, or implement some other internal policy changes that reduces product quality. This causes another opportunity for you to lose market share.
Okay, so what can your companies do right now to ensure 20% or more growth?
- Planning – Have and work with a written business plan.
- Core Customer – Identify who is your most profitable and loyal customer, and focus on those customers that will most likely buy your product or services in the quantity required for optimal profit.
- Differentiate – Make sure that your company has an uncommon offering that is targeted toward your core customer that your business will “own” and leverage.
- Invest in Your Sales Force – Get rid of your “C” players immediately. Invest whatever it takes to train and develop your “A” and “B” players to peak performance.
- Improve Hiring Process of Sales Force – In our experience most companies do a very poor job in hiring salespeople. The assessment tools and interviewing processes they use produce a poor success rate. This costs companies a lot of money on the top line.
- Find Top Talent – Evaluate every employee at least once a year. Get rid of your “C” players, and figure out which of your “B” players can be developed into “A” players.
- Marketing – Great advertising and public relations is what attracts potential business to your sales force.
In summary, it is important that CEOs realize that a down economy is an opportunity. Also, while I agree that all companies should always manage their expenses prudently, you cannot cut your way to prosperity. While focusing on costs, many companies inadvertently destroy their top line, requiring them to put more pressure on the cost line, thus creating a spiral effect. I would rather step on the gas and grow the top line while managing my costs well and never have to worry about layoffs.
Review our website to understand how an executive coach or business coach can help you increase the success of your career and business, or contact Howard Shore at (305) 722-7213 or [email protected].