To say that times are tough for any business is probably an understatement. The global recession is hitting businesses very hard as disposable incomes shrink, funding and credit sources dry up and markets disappear. Faced with these hardships, the standard text book (or knee-jerk reaction) is to downsize – cut costs, retrench staff and reduce product ranges. To me this sort of reaction is short-termistic and suggests a defeatist attitude which may be detrimental to the long-term sustainability of the enterprise. I believe there are more innovative ways in which businesses can survive and thrive in hard times and I will discuss five possible strategies which enterprises should consider:
- Product redesign
- Staying close to customers
- Expanding delivery channels
- Staying legally compliant
- Sticking close to the bankers
Product redesign
It is a truism that many products are designed for “normal” times. They are supposed to deliver a certain performance within a certain timeframe or they are expected to remain usable or consumable within a stipulated period (i.e. the product shelf-life). If that is the case then surely the parameters have to change in difficult times. I would advise that enterprises should, instead, design products that will last longer and save customers some money. For example if the product was originally designed to last for X months, consideration should be given to re-designing it to last for X+ or Xx months. Re-designing a product does not necessarily mean reinventing it. It may mean repackaging the product or recasting the marketing message to emphasise the longevity and cost saving aspects of the product. Instead of selling the product in small packages that get finished in a week, why not increase the size of the package so that it lasts for one and half or two weeks? When such changes are supported by a marketing message that intones empathy with customers’ financial constraints and a desire to help them manage through financially stressful times, this will strengthen the bonds with existing customers and attract new customers.
Staying close to customers
An important aspect of product redesign is to get customers’ input into any existing or new products. In good times, staying close to customers is very important. In tough times, it is critical and may be the only difference between survival and demise. Enterprises need to understand clearly what motivates customers to buy their products and what are their specific experiences in using those products or services. Needs of customers are shaped by their environment and circumstances and, given the evolving nature of these variable, it is inevitable that customer needs will change in difficult times. Enterprises therefore need to understand what the new needs of their customers are and how they can better meet those changing needs. Enterprises that stay close to their customers are quite likely to be more able to withstand the storms of recession and to grow their customer bases.
Expanding delivery channels
How you deliver your products is also very important to consider. In normal times you would expect the customers to come knocking at your door and take whatever it is that you are offering with little or no quibbles. In tough times you have to go looking for the clients and, not only that, you also have to devise different ways of delivering the product or service to them. This means using all possible channels which are available. The internet is a good delivery channel for selling products. Therefore if you have been selling only from the shop floor, you can expand to online selling. This means that you have to plan to deliver products to clients rather than wait for them to come and collect.
Staying legally compliant
In tough times it is so easy to fall prey to the temptations of non-compliance with regulations. Fiddling books of accounts, tax evasion, late settlement of debts, etc. become attractive options when the going is tough. My strong warning is that beware! Great dangers lurk in the wilderness of non-compliance. Many an enterprise has been felled or brought to its knees by the taxman’s invoice or the collector of a debt which has long been ignored. My view is that organisations that are complaint are much stronger and better placed to withstand the shocks and uncertainties of recession than those which are not compliant. Therefore keep you books up to date and accurate, submit the VAT and other statutory returns and pay your taxes! If you do that, your enterprise is less likely to be washed away by the tides of recession.
Sticking with your bankers
One of the biggest contradictions in life is that when you don’t need money, the bankers love you to nuts and when you are broke and need money the bankers don’t want to hear from you or talk to you or listen to anything you say. My experience in business has taught me that the second most important stakeholder to the enterprise is the bank (in case you are wondering, the first is the customer). In all times and, especially, in tough times you should keep close to your bankers. This means keeping them fully informed of what you are doing, what challenges your business is facing and what plans you have to withstand the challenges and to grow the business. You can do this through sending them a periodical report, sharing your accounts with them and scheduling regular briefing sessions/informational meetings with your bank manager. The long and short of it is that do not wait until you need money to go and talk to your banker. If you leave it to that point, it is probably too late and quite futile!
Of course this is not an exhaustive list. It is merely a starting point. But I strongly believe that if you do some and/or all of these things, your enterprise is likely to stay healthy and to grow and prosper in these difficult times.
Strictly4Business 