Business Tips For an Economic Downturn

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1.
Priority one: focus on what you do best.
It is essential in down times to have a clear picture of where your most understood revenues and expenses will come from.
Your core products and services provide the most reliable source for predicting the revenues, and here is also where you have the best understanding of operating costs.
It is also where the company usually operates the most efficiently.
Form a cash flow baseline based on your core business.
This forms the picture you need to make decisions about the rest.
Imbalances on either the revenue forecast or expenditures will be exposed quickly and in down times these need to be addressed immediately.
2.
Stay away from "fringe marketing" syndrome.
The explosion of outbound marketing over the internet exposes you to many new opportunities every day.
In down times the need for revenue is high.
So it is very tempting to decide to just tweak a product or service and capture that incremental business opportunity.
But in down times the company must also operate as efficiently as possible.
Servicing incremental opportunities is dangerous because actual returns are usually far less than predicted and you often pay for the decision with a high opportunity cost.
These are not good odds for in a downturn.
Why are the returns lower than predicted? Because there is always overhead in packaging a product or service for delivery to customers whether there are one or twenty new features in it.
While the best cost accounting can attach an average or typical overhead cost for this, it cannot accurately predict the actual cost.
What happens too often is that the seemingly incremental new feature to capture the new revenue will disrupt something major in the product or service.
When this happens, the company must react and the costs mount.
Murphy's Law says if it can happen it will happen.
And in the end the great opportunity winds up costing the company more than it was worth.
There is also the potential for loss of efficiency.
If your organization is operating efficiently and new unplanned "twists" in the development process enters the mix, it will force pre-planned activities to shift in either their features mix or their delivery times, or possibly both.
If this effects a core product or service deliverable, then the decision to engage in the fringe opportunity is trading off predictable revenue from a close customer for unpredictable revenue from an unpredictable source.
This sets up an opportunity cost penalty for the decision.
If more revenue is needed than the baseline predicts, try approaching your close customers for advance payments on future deliverables.
This is far less risky, because as a valuable supplier, they will negotiate reasonably.
3.
Bargain Hunt - If you are in the enviable position of having cash in hand, and your core business cash flow analysis indicates your business will remain healthy, a great alternative to fringe marketing is to bargain hunt for businesses that would compliment your core products and services.
Invest or acquire them.
Often times in down economies, small businesses that were just about to scale become stalled.
These businesses have great people, a working business model, and are efficiently operated.
But they have no cash.
Investing or even acquiring them becomes really a win-win proposition.
You benefit from having more top line revenue, and even better if it can bring some profits.
They normally can be operated as a self contained business for a while, so it will not disrupt the efficiencies highlighted earlier in your core operations.
Using your cash also achieves all the same objectives as a fringe marketing play, but in a much stronger way for the company.
The small company benefits from cash or assets injections they desperately need to survive so they should be happy as well.
There is always a deep apprehension to spend in a down economy.
But these are the times where the best business values arise.
4.
Create strategic alliances- In downturns, the necessity to band together to stay alive often times creates opportunities that would not necessarily be considered under better economic conditions.
Take imitative and offer a win-win value proposition to a potential partner, and some great channels may open that enables you to scale your business efficiently.
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