In contrast to the rosy picture politicians of both colours are painting about the prospects under their government, and the disaster looming if we elect the other, I think we are in for a rough ride.
I am not an economist, so have no numbers apart from those in the public domain to support this rather pessimistic view. However, I have been around a long time, and the feeling in my guts from the anecdotal stuff I see everywhere has a familiarity to the lead up to several tough periods I have seen before.
Part of the challenge is that many now in so called leadership positions have never seen a downturn in their working lives.
So, following are a few tips on commercial survival in a tough period, and dare I suggest it, prosperity, if you are bold enough to see the downturn as an opportunity.
Act early.
If you agree that it might get nasty, batten the hatches before the impact gets to you. Even if the worst does not happen, you will be better off anyway by seeking greater productivity from your resources. If it does get nasty, you will then be in a much stronger competitive position for being prepared.
Focus resources.
Pareto rules, and focussing on the 20% that generates the 80% is always a good strategy, and essential to thrive in tough times. Doubling down on areas where you have a competitive advantage, increasing your share of key customers wallets, being explicit about your value proposition, sending high cost low margin customers to competitors, and so on. In effect, you set out to do more with less, increasing the productivity of your assets.
Take a long term view.
Economies work in cycles, every downturn is followed by the good times, again, it is just a matter of time. Many times I have seen a few businesses double down on marketing activity when others are cutting to preserve short term profit, grab market position at relatively low cost, and keep it when things improve.
Be opportunistic.
In a downturn, opportunities arise that may not normally become available. Some of those I have seen in the past:
- Customer acquisition becomes less costly
- Distressed sales of inventory, businesses, capital equipment, premises, all sorts of opportunities emerge as others scramble for cash.
- Lead times for capital equipment, and contractors with specialised skills become shorter.
- Great people with the capabilities you need to grow suddenly become available.
The challenge is to remain externally observant, while everyone else has their eyes on their own internal problems.
Be collaborative.
Tough times are usually the best to forge lasting relationships. Assisting others when they really need it creates trust, the foundation of collaboration, which will pay off in many ways over time.
Expect the unexpected.
While this may be akin to being optimistic, in my experience, planning to be opportunistic does help. Anticipating the opportunities before they actually emerge enables planning, and therefore better use of resources. It amounts to being prepared to be proactive rather than just being reactive.
Hoard your cash
To act on any of the above, you need cash. While interest rates are at historic lows, having cash when others are struggling is like being the only one in a rainstorm with an umbrella. Everyone wants to be your friend. Hoarding cash is not a matter of being mean, it is an outcome of discipline in your expenditure, removing waste from your own processes, maximising your own revenue generation strategies, and collecting from debtors.
When you would benefit from the experiences of others, give me a call.
Header photo courtesy Sarah Macmillan
