“If things go wrong, don't go with them.” (Roger Babson)
I have been providing IT consulting and services for more than 25 years. By implementing software in various firms, I gained a privileged insight in the way managers address the challenges their companies might face.
Throughout those years, I met different kinds of leaders: a few of them were outstanding, providing their organization with a clear vision and a path to success. Most of them were running their businesses correctly but without extraordinary achievements. A minority of them, unqualified for the positions they held, were blessed that the market was good enough to cover for their inadequacy. Everybody can run a good business when the economy is booming. The economy slowdown we are experiencing in a lot of market will act like natural selection for the enterprises. Only the strong, the agile and the innovative will survive. To drive his business through these difficult times, an entrepreneur must act with intelligence, boldness, imagination and rigor.
With the Coronavirus hitting the planet, a lot of markets are in danger right now. Some companies are already in the middle of the storm while others see it coming in their direction. Through sofware implementations, I worked closely with various business owners. This gave me the chance to collect several ideas and approaches which I will summarize below.
TPR (Think Plan Realize)
“Know the enemy and know yourself; in a hundred battles you will never perish.” (Sun Tzu)
Don’t panic. Fear is our enemy. Don’t react too fast. In these hard times, you need to get it right with a minimum of attempts. Assess the situation and analyze the facts. Make sure that you have all the numbers up to date: cash positions, sales trends, credit situation, etc.
You need a clear understanding of your positions and possibilities. Take time to brainstorm. Try to step out from the current daily operations to dedicate your time to this. Involve your employees, your vendors, your clients, etc. Make sure you understand the underlying causes, not just the effects. Accumulate information about the competition, study their actions, and anticipate their direction.
Once you get a clear understanding of your current situation, you need to build new plans and start achieving them now!
It is NOT business as usual!
“In spite of your fear, do what you have to do.” (Chin-Ning Chu)
Crises are motors of transformation. They force everybody to change the way they work. Eventually, your own clients will think and act differently. The same will apply to your competition. So, don’t try to do more of the same soup. Think outside the box. Don’t rely too much on previous success. Take into consideration that what has worked before will not necessarily work the same way in the future.
Look at what other markets, completely outside of your sphere of business, are doing. It may give you fresh ideas that are not currently applied in your own market.
Be a market leader and let the others follow you!
Sharpen your pencil
“We never know the worth of water until the well is dry.” (Thomas Fuller)
Are your finances still in good shape? Excellent! Don’t wait. React immediately before the problems arise.
Refocus on your balance sheet.
Reassess the credit you are extending to your customers. Keep a closer eye on your accounts receivable. Pay particular attention to the largest accounts. Watch for new patterns of slow payments and react immediately. Increase contacts with your clients. Learn about their business. Try to determine whether credit or economic slowdown will affect their ability to pay you. Your target is to forecast problems before they occur.
Get prepared now for eventual declines of revenue. Reevaluate any expenses and look for opportunities to reduce them. Rationalize your costs by questioning each element. Every penny spent must have a reason and should drive productivity. Reexamine your current pricing and rates. Get collaboration from your vendors. They are also fighting to survive and will likely be willing to renegotiate their rates in order to keep your business. Avoid engaging the company in fixed costs as much as possible. Favor operational costs that can be adjusted depending on current needs. Minimize the need for credit by reducing any non-critical expenses. If you have inventories, review your management practices to minimize your on-hand stock.
Optimize your operations
“When we are no longer able to change a situation, we are challenged to change ourselves.” (Victor Frankl)
There is no better time to review your business processes. This time, don’t just enhance existing processes. Instead, revisit the underlying reasons why you are doing each activity. Try stepping out of your comfort zone. Your company must become agile and lean.
Take better advantage of technology. If you already have any kind of software in place, make sure you use it to its full potential. From experience, I can affirm that only a few companies use all of the tools and functions within their software. If you don’t have a program which covers most of your operations, get one if there are any available for your particular market. Software projects are costly and require a lot of resources. Don’t try to reinvent the wheel. You need fast results. Use a standard package even if it does not cover 100% of your needs.
Focus on your company strengths
Reexamine your market position. What are your strengths? Which market segments are most profitable? Which ones have the highest profit growth potential? How will they be affected by the economic slowdown? Once you have answered these questions, concentrate on these markets. Get rid of the lowest profit margin markets.
Talk to your clients. They will tell you what your strengths are. Take the opportunity to learn, enhance your services and products from their complaints.
Outsource all non-core functions. This gives you time to concentrate on your core business and excel at it. Do not spend time and resources on any activity that does not reflect your business in the market.
Look for new markets
Look at unsaturated markets that you have not examined before. Strike up alliances for new markets where possible in order to consolidate and pool resources. Well chosen partners will reduce new market penetration time, enable you to pool resources and minimize costs.
Find new services and products you can sell to your existing client base. This is where you should have the fastest benefits.
During the crisis you will most likely loose clients. You need an aggressive marketing and sales strategy to get new business, in order to replace these losses. Even with the Coronavirus affecting almost everything, people will still have needs and company will still have to fullfill them. There will still be prospects out there!
Sales activities must be industrialized. You can no longer rely exclusively on the good (or bad) performance of individuals. Organize your sales team. You need to be able to measure and manage the sales activities. There are plenty of inexpensive software available to help you achieve this.
Take advantage of technology. Internet is one of your best salesmen. Get a new web page. Don’t try to create it yourself. Pay a good web designer to build something that looks professional and will position your site in various search engines. There are so many SEO tools that will help bringing prospects in. You may be surprised by the results.
It has been said: Don’t wait for clients to come in. Go out and get them! Go back to basics: take the phone, do the numbers, hit the street. Don’t rely too much on emails and mail campaigns. These are usually for lazy salesmen.
In the end
“We survive on adversity and perish in ease and comfort.” (Titus Livius)
Treat the crisis as an opportunity to reinvent your business. When the market will rebound, your company will then be stronger, leaner and better.
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