- Marketing and Advertising – Guerilla marketing tactics also work better in recessions, and you have to get the maximum benefit from the resources that you have. You need to negotiate for marketing and advertising, and making best use of what marketing is carried out. You cannot just stop marketing your products or services, but make sure that the expenditure you do make brings as much return as possible, and pause the advertising campaigns that focus on building a brand.
- Cut Down on Wastes – Budgeting of consumables is another area that can be tackled, and even paper supplies mount up over a period of time. Consider the amount being spent on the provision of toiletories. Calculate savings in terms of annual rather than daily.
- Cut Down on Energy/Electricity – Reduce the number of lightening in the environment. In this regard, switch on only lights that are necessary. In countries where there is no constant electricity, identify the time (day or night) and schedule your staff to work during those periods. Also, consider switching on the generating set (where in use) only for productive purpose.
- Manage Time – Reduce the number of hours worked in overtime and manage your staff better so that you still get the work done.
- Reduce Labour Cost – Recession comes with it tough decisions that could not ordinarily have been made. It is an ill wind that blows no one any good. It is a difficult decision to let staff go, but sometimes essential. You could convert some full timers to part-time contracts temporarily, and retain the brightest and best works full time. You can also adopt the payment of half salaries to all staff rather than laying anyone off.
- Close Non-Productive Branches – Recession is not a period to use profitable branches to service non-productive branches. Any branch that is not self-sustaining should be closed down or used for other profitable businesses, except the continued existence of this branch will translate to more income for other branches.
- Retain Existing Customers – Some of your competitors might try to take advantage of financial squeezes to wrestle your customers from you. One of the ways of maintaining the loyalty of your more important customers is through discounts. Avoid bad-mouth or de-marketing your competitors. Recession is a good time to strengthen bonds with existing customers and clients and who knows you might be able to help them through these difficult times, and then they will show their appreciation to you once the good times come back.
- Start a New Conversation With Your Customers – You need your customers as much as they need you. Recession is a global thing. In as much as it affects your business, it also affects your customers in various degrees. Recognise the changing dynamic and ask them about their new needs and challenges. Work with them to modify your products/solutions to meet their new reality. Hold regular meetings to resolve any grey area.
- Reinforce the Employer Brand – Recognise that layoffs and extreme cost-cutting will affect an employee’s perception of your company. Rethink existing employee development plans and provide low-cost development opportunities so that high performers will still consider your company a great place to work.
- Hold Regular Staff Meetings – There is need to hold regular meetings with employees so as to keep them abreast of developments in the economy and its resultant effect on the company. Do not assume that they should know. Carry them along.
- Invest in Other Areas – There is need to maintain a strong cash position during recession. It is also an opportunity to make wise investments decisions in technology infrastructure, and employee development. Prices of all items have fallen drastically and demands have also reduced. This is against the economist position that the lower the price, the higher the demand. You should find a way of utilising the low prices of items because it will not last forever.
- The 80/20 Theory – You need to focus on your core business, and make sure that you remain focused on the products and services that are making you most money. In applying the 80/20 theory, you need to determine 80 percent of your income comes from 20 percent of your customers, or 80 percent of your wastage or scrap comes from 20 percent of your products. Focus on your customers first and waste second. You have to identify the 80 percent and 20 percent factors so that you can plan your cost cutting strategy going forwards. Change your product mix. Remember that people sacrifice luxuries during recession, invariably readjusting of your business focus from luxury goods to essentials, from expensive products to their cheaper equivalents. Diversity into products that would be more practical at times of crisis.
Monday, April 27, 2009
How to Manage Your Business During Recession
Posted by Phil at 4:08 AM