For many companies, this is a very difficult time. The tragic events of Sept. 11 pushed an already struggling economy over the edge for many industries.
If you want to survive, it’s important to have a list of key measures to navigate your business through these tough times.
Each day, I talk to business owners who have high debt levels and are easily discouraged. The Federal Reserve Bank keeps dropping interest rates, but consumer confidence continues to decline, unemployment is rising, and there doesn’t seem to be a light at the end of the tunnel. It’s hard to give people advice when they ask what they should do because there are so many unknowns.
This changing business climate will invariably result in changes in many companies. Change brings uncertainty to your work force, which leads to a drop in productivity as people wonder about job security and the viability of their employer.
Internal and external communication are key. Internally, it’s important so everyone is on the same page. If people are not aware of what’s going on within the company, they will be forced to reach their own conclusions.
This is bad for morale, because conclusions may be based on incorrect information. Everything needs to be put in perspective. If you are in management, it is your responsibility to keep employees informed.
Externally, it’s important to communicate so customers and vendors can work with you. Make sure your relationships are strong and that they are aware of what’s going on with your company.
When you’re not sure what to do, honesty is the best policy. You’ll be surprised how willing people are to help if they’re asked — look at how much money was donated to charity after the Sept. 11 disaster.
Here are five more measures to help navigate your business through a rocky economy:
1. Manage your fixed costs. Continue to find ways to bring these down. It’s important to closely manage your budgets in a time like this. When you can replace fixed costs with variable costs, you should do so.
2. Provide more value. When it comes to someone deciding between you and your competitor, this is how you differentiate yourself. Find ways to give the customer a little more than your competition does.
3. Measure investments, and measure every cost. It’s important for your investment to yield a return. Set a realistic timeline of when you expect a return, and if it doesn’t happen, cut your cost. Look at each piece of your business and see which are paying for themselves and which are not.
4. Refine your niche. Position yourself in the marketplace as a dominant player and distinguish yourself from the rest of the pack to make it clear why people should do business with you. Concentrate on your core products or services and do what you do best.
5. Adapt quickly. Make decisions in a timely manner. During times like these, leadership is needed. Adapt quickly to the circumstances around you or your competitors will. But don’t make blind decisions; it’s important to consult with your management team, then act based on the feedback you’ve gathered.
Now is not the time to get discouraged. It’s time to roll up your sleeves and get your hands dirty. The boom times are over for now, and it’s much more difficult to run a business than it was just a few months ago.
Not every business will survive, but those that carefully navigate the perils ahead will come out stronger and ultimately more profitable.
Fred Koury ([email protected]) is president and CEO of SBN Magazine.