You need to manage the growth of your business, even in a downturn. Stephen Bentley has some advice for you to overcome that challenge.
Managing the growth of your business in a downturn is a challenge. The key to overcoming that challenge: ignore the recession. Sounds strange? Remember, at the end of the day you need to plan for growth irrespective of the economic conditions.
A business needs long-term sustainability. Most companies anticipate a downturn in a recession, and of course you need to work even harder. But in order to remain profitable, businesses need to be careful when choosing both new customers and suppliers.
It's easy to be drawn into the world of competitive pricing as it may seem like the best way to attract new customers and clients, and indeed maintain the existing ones. However, it is very important not to sell yourself short - particularly if you have a high-quality offering and corresponding premium. It’s tempting to chase business just to boost turnover figures, but you need to make sure it’s profitable business and doesn’t end up costing you money in the long-run. At the end of the day, you still need to pay your bills and make a profit, even when times are hard. It is a good idea to bear in mind that the cheapest option, although it may seem the most attractive one, is not always the best.
The supplier market is an area that needs particular attention during a downturn. Stable and reliable suppliers are essential. Companies and brands need to guard their company identity and that requires suppliers to be on board 100 per cent. Keeping an eye on cash flow, the challenges that crop up and, of course, staying on top of deadlines and payments to suppliers is crucial.
Being open minded about the recession has the potential to open you doors of new opportunities. Always examine whether existing resources and capabilities can be utilised in different ways. You might find overlooked revenue streams or opportunities to diversify that can pay dividends when times are hard.
When going through changes and tough times, communication with employees is more important than ever. After all they are likely to share the same anxieties about the security and long term health of the company that you do. So be open, communicate your strategies and align their rewards with the company’s strategic goals.
Ultimately it all comes down to profit. Unlike what many people believe, 'profit' is not a dirty word. Profit allows you to reinvest and to grow your business. As we all know, cash will always be king. You can only embark on growth if you can satisfy cash-flow demand, which is why all of the above is so important for a business to thrive in a recession: keeping suppliers loyal, being sustainable, not selling yourself short and being open minded and flexible.
Here are my top five tips for managing growth during a recession:
1.) Manage your cash. Too many businesses fail because of cash flow difficulties. Implementing a rolling 13 week cash flow is one of the best KPI’s you'll ever have.
2.) Review your team and structure. New business brings additional demand and needs new skills and resources. Your people need to reflect the business and where it is going.
3.) Don’t forget why you went into business. Ultimately you went into business to make a profit. Too many owners chase turnover rather than profit - don’t let your ego get in the way of paying the bills.
4.) Review. Review your business, monthly accounts and budget regularly. You have to be agile and open to change and opportunities.
5.) Don’t dilute. Protect and carry on what you have, make sure growth doesn’t impact other parts of the business. Additional new business should be seen as the icing on the cake, not a burden.