One of the biggest mistakes business owners can make in this economy is to try to sell your way out of a bad financial position doing the same thing today that you’ve done for the last several years.
The very best companies we know are not only dealing with the reality of the current climate and its related effects on their business by systematically building a new foundation to survive and weather the storm. Last month we talked about the mentality of what they are going through with their reset process. This month, we’ll focus on the approach.
They are resetting their businesses ‘brick by brick’.
When a storm shakes the foundation of any structure, no amount of patching over the problem will keep the building inhabitable. In spite of that fact, many business owners we talk to still want a ‘quick fix’. Of course, that quick fix assumes two things that may or may not be real … that the storm is over and that the fix will last.
Your recovery effort (and this economy’s) relies on embracing a more pragmatic approach is to reset ‘brick by brick’. And that means assessing everything related to your people, strategy, execution and financing. In times of growth, you attack this equation top-down. In times of difficulty, the attack is bottom-up.
Adjust Your Financial Reality
The first brick is financial sustainability. Whatever your expectations were for how much money your business will make this year, set them aside and assess what is real. Chances are the last 6-9 months have exposed a different baseline than the one you have been operating under. Step one is to adjust to that baseline.
Create a baseline set of Vital Factors that are healthy?
- What has revenue averaged since the downturn last fall?
- What expense level is required to generate profits at that level?
- What level of cash reserves do you need to stay in business at 50% of that level?
- What adjustments do you need to make in operations to support this baseline?
Align your strategy to today’s market
The second brick is relevance. One of the hardest things for small business owners to accept is that the same buyer who said yes to something last year will now say no. Their needs and buying criterion have changed. Your challenge is to quickly assess where it is you fit in this new world order and make the appropriate adjustments to the value of the product or service you offer.
Do buyers still value what you do?
- Talk to your best customer. Ask them how they are making decisions around how much business they will do with you this year.
- Identify others like them and begin to build new relationships.
- Connect and passionately involve yourself in forums where your buyers gather. Listen and learn about their needs and preferences.
- Assess your offering dispassionately. Figure out how they would most likely evaluate you and what enhancements would make you more relevant.
Tune Your Execution Processes
The third brick is velocity. Nothing will slow your business down faster than poor response times and lackluster customer service. In today’s market, buyer’s patience levels are low and the number of options available to them high. If you want to survive and thrive, the quality and speed of your service can be the defining differentiator.
Are you operating at peak efficiency?
- Measure how much time and resource is spent covering the basics of creating, shipping, delivering, implementing and supporting your customers.
- Identify the service levels required to be ‘best in class’.
- Work though the refinement of daily work processes and communications that streamline these efforts.
- Create a feedback loop with your buyers and customers to uncover how much they value any changes you make.
Organize and staff to better serve today’s buyer
The fourth brick is agility. When a market and business cycles shift dramatically, the team that is serving you needs to adjust as well. Talents that were valuable two years ago may be less important today … and vice versa. Once your financial, strategy and execution adjustments are set, take a good hard look at how to realign your resources more optimally. You need a team that’s looking forward, not back.
Is your team motivated or scared?
- Take some time to assess the culture and morale of your team. What things are they focused on … problems, being overwhelmed or how to get better?
- Create an optimal configuration of an organization that is designed to serve the needs of today’s buyer … and lives within the budget you set.
- Assess the team you have from a strengths and weaknesses perspective against these requirements.
- Develop a plan for improvement and a way to honor everyone in the transtion.
By taking your reset cycle away from a ‘change’ and into a simple set of activities for improving performance, you’ll be recreating the same environment you had when you started the company. The owners who do will find a path through this downturn, those that don’t will end up with the majority who slide backward and exit.
Take it brick by brick and you’ll be on the road to recovery.
Enjoy the journey,