Congratulations! Despite dire warnings of economic collapse — and possibly the end of civilization as we know it — you’ve decided not to head for the hills with a rifle and a trusty old pack mule. You’re going to stay in business, perhaps expecting the current down business cycle to follow the script of every previous downturn and turn up again in a few months.

Actually, recessions kill relatively few businesses, acting instead more like a predator that claims the lives of unhealthy operations. Sure, there’s always some discomfort, but if a company is in good shape, they’ll generally live to see better times again. The key, of course, is getting in shape. And fortunately a few simple steps can set things right and keep the wolves from the door.

Protect What’s Yours

If you’ve been in business for any amount of time, you have existing customers ... and certainly you appreciate them. But are you doing as much for your clients as you could? If things got to be a bit difficult for your customers financially, would they be motivated to find a way to keep you in their budget? Though it may be tempting to charge for every little extra (especially when cash flow is tight) doing so is pennywise and pound foolish. Take the extra step to give your existing customers a bit more care. Rather than an expense that’s ripe for cutting, you’ll be seen as a resource they can’t possibly do without. Another big upside of being a value-added service provider is that you’ll learn a lot about your clients. And they’ll learn to trust that you have their best interest at heart. That’s a great entry to discovering new business opportunities with them. Use your intimate knowledge of their needs to make suggestions that will lead to more business.

Explore New Territories

You can take a couple of approaches to finding new customers. One is simply to target business that you’ve never tried to reach before. Assess your core competencies and get together with your staff to come up with a “New Prospects” list. Also look at associates of your existing customers. Related individuals or groups frequently have similar needs. Your active clients could help introduce you. The second strategy involves changing yourself, rather than the customers you’re trying to reach. Or at least, change the way you’re perceived. Might it be time to give your brand a makeover? Take a fresh look at your value proposition and make sure it’s up-to-date and accurate. You may find your marketing no longer reflects everything you do, or conversely you might realize your message is scattered in so many directions, nothing stand outs to your prospects.

Take Stock and Be Prepared

Inevitably, an unfavorable economic climate will lead to some belt tightening. Here are few actions on the financial front that in good times will add to profitability and in bad times, can lead to survival.

• Before committing to long-term financial obligations do a worse-case scenario evaluation – This is relatively easy to do when times are bad, but it’s the prior commitments that that can come back to haunt you later.
• Have a substantial line of credit (that you avoid touching) – Call it your emergency escape hatch, but view this line of credit as something to access only as last resort. In general, pay-as-you go is always the best approach.
• Increase efficiency – Obvious, right? The fact is, even the best managed companies do things that don’t make a lot of sense. Ask staff members to point out procedures or policies that are a waste of time and effort, or to make suggestions that will increase efficiency. They are likely to respond enthusiastically — either to possibly save their jobs, or so they won’t have to keep doing senseless things.
• Don’t have too many eggs in a single basket – If you find you have as much as 25% of your revenue coming from a single source, sound the alarm! Do not rest until the situation is corrected. If they go away, you don’t want to go away as well.
• Hire wisely – Learn from any reductions in force that may have occurred in the past. How did you end up with employees that you came to consider “expendable?” Once you figure that out, you can avoid the same painful position in the future.

Back to Notions: Fall 2008