Times are tough and they are likely to remain challenging for many businesses. It’s always been the case that only when things are difficult does genuine quality rise to the surface.
So what do businesses have to do to ensure that they succeed in the economic environment of the next few years?
The prospect for the next few years is one in which the economy will be less dependent on government, with spending to be cut aggressively and with one recent forecast predicting a decade of weakness in consumer spending. Exports and investment in new and innovative products and services have to be the engines of recovery.
The changing nature of the economy presents a whole series of questions for any business:
How can it manage its workforce through the peaks and troughs of activity?
What finance will it need, short term and to invest?
What are the challenges of entering and maintaining export and / or new markets?
How does it develop new and innovative income streams?
There is no ‘one size fits all’ answer to these questions. Different businesses will have different requirements but here are a few tips from quality businesses that have succeeded in past tough times:
Put Your Customers First:
For the next few years, arguably more than ever, companies need to understand their customers, be able to respond to their needs and the pressures they are facing. Household income has been squeezed, which some experts predict will continue to be the case until 2013. For most consumer-facing businesses, that means offering value for the customer. The key here is to invest time in understanding your customer spending patterns and their needs.
Take some time out to research these needs; look at how you satisfy these currently and what you could do to improve your offering. Think of ways you can change the delivery of your product or service:
Simple things like discussing your offering with the customer before providing it, letting them know how things are progressing, calling them up to make sure everything went OK after delivery.
Constant communication with your customers before, during and after the sale is a key factor for successful business in tough times. Ask yourself what you could do to improve this in your business.
Also take time to seek out new revenue streams. Consider rebranding some of your offerings and selling abroad or on the internet. What new income streams are available to you and how can you take advantage of them?
1. Control your Costs
Keeping the cash coming is fundamental but so is controlling the rate at which the cash flows out.
Take some time to think about your costs and what you could do to improve the way you manage your business. Regular review of targets to actual costs on a monthly basis is paramount to good control of your business.
Look at the way you do things – are there alternatives? Consider alternative suppliers, alternative payment schedules, better use of electronic point of sale, stock management and quality control.
Sit down with your accountant and discuss your strategy for controlling costs and the management of these. Brainstorm how you can do things more quickly and more efficiently and formulate a strategy for the next year.
2. Manage your Employees
One of the biggest costs for firms is the cost of employment. Taking on new staff is expensive, equivalent to fresh investment in the business. Many successful businesses are reviewing the value they get from their employees and are taking time to discuss how they can be more customer focused and efficient in their roles.
Look at alternatives to salary rises, the use of performance related pay and a bonus structure that rewards both good service to customers and increases in sales. Get all employees involved in how the business can improve and do this regularly.
3. The Blueprint for Success?
There is no single answer but there are some general principles. Be flexible, but also be alert to the dangers. The successful businesses of the future will be fast on their feet but also aware of the risks. They will be lean and efficient. They will be the ones who spot and take advantage of the opportunities that are there. Tough as the outlook appears for the coming years, there will still be plenty of opportunities!