By Brian McKay
There is a lot of economic uncertainty in the world right now. The stock market is pretty ugly. Growth has been tepid. International economies are in bad shape. Sometimes it is better to be ahead of the game than behind it. Now is that time.
The best thing that can be done right now is to start taking steps to make sure your company is running very lean. Super lean. Cutting costs when sales are falling is tough and you are already behind the curve.
What amount of employees are enough? It is no secret that the biggest cost on a balance sheet is personnel. If you are adequately meeting the needs of your customers right now don’t plan on additional hiring in the near term. Have a plan in place for what positions are the least necessary for when you start to see things slow down. It is never fun to have to cut people you have grown to care about but at the same time you want to avoid a potential funeral with a lot of people at it.
If there hasn’t been enough time lately to shop for less expensive sources, make it happen now. Any cost savings achieved now mean survival later. Business people get attached to suppliers they have built relationships with. Who can blame them. A strong relationship is awesome but it is also a luxury of good times.
Evaluate your lease situation. Is there room to negotiate? If so, go for it. This is a huge cost and any relief here will beneficial.
One fallacy often made during downturns is that businesses dramatically cut marketing. Don’t. Or at least not drastically. While you should always track all of your marketing responses to find the best return on investment, scrutinize it harder now and put your money there. Keep building your brand and capitalize on the area others have abandoned.
If your business is new and experiencing strong growth right now, control it. Growth is really expensive. Really, really expensive. Business owners often get so caught up in the great sales numbers that they forget to look at the high costs of ramping up. There is no shame in keep growth manageable now in order to control costs that might be too much if things move into a decline. Let your competitors grow themselves into oblivion. Capturing their business later is a huge benefit to you.
Limit capital expenditures. Some new computers sound nice. A new piece of machinery does some cool stuff. If you can make do than do so. The last thing your business needs is another payment to make.
Don’t limit new products offerings. If you see an opportunity that expands your business and might be something customers need regardless of finances, add it. Remember that in a downturn anything that saves people money becomes a hot ticket. If you can add a less expensive product that fills a need, add it.
Don’t do things that demoralize your work force. If you provide free coffee, keep providing it. It may save a few bucks but efficient and happy employees are worth far, far more.
Practice your public speaking skills. Yes, communication becomes ever more important in uncertain times. You might run a good business but being able to motivate and lead is just as important. Change is tough sometimes. Communicating the reason why it is happening is absolutely necessary.
Remember that none of this has to be dramatic. Dramatic could be counterproductive at this time. Mostly, just be prepared.
You are going to learn more about your business than you ever thought possible right now. Many owners think they know exactly what is going on at all times. They don’t. Be prepared for the biggest learning experience of your life.
Feature image courtesy of Flickr, available under aCreative Commons Attribution-Noncommercial license