The sky is falling! Batten down the hatches! Cut back on everything. The economy is coming to a complete stop. HOLD IT! Do you really want to throw all of the good things you have been doing out the window because conditions have changed and the economy is slowing down?
Examine your situation before you make any significant alterations in your course and direction. What has made your company successful? How have you been able to improve your market share and profitability? How have you become more competitive in the face of increasing competition?
Mostly, you paid attention to some basic tenets of business. You improved your effectiveness, utilizing your capital and human resources more efficiently. You planned where you wanted to go and how you were going to get there. Then you monitored your situation so you could adjust to changing economic conditions by making modest mid-course corrections.
Well, when there are more significant economic upheavals, why would you change the way you react? Why would you make large changes with minimal reflection on what effect these changes might have on your long-term profitability, growth-ability and survivability? Why abandon the process that has brought you success because there are changes in your environment? Think before you act.
Know your costs! This can? t be emphasized enough. If you have good knowledge of where you are spending money and why, you have the basic tools to allow you to analyze where you can cut costs without cutting into key elements of your company. It is a good idea to trim fat, but don? t cut into the muscle that drives your business.
You have spent years building up the specific group of key employees with the skills and knowledge that power your company. If there is any way possible to keep the core group together, you should strive to do so. A detailed knowledge of costs is necessary so you can safely cut. You will also know where it would be unwise to cut.
There are many reasons for this. First, one should assume that eventually the economy will turn around. If you have cut key people, it would be unlikely that they would be available when you want to hire them back. Thus, you may be in the position of having to redevelop the level of talent and knowledge you currently have in the company. This will have to be done at a potentially high cost and with considerable time delay.
Second, during the slower times, you will want to concentrate on the core parts of your business. These are the parts of the business with the highest potential and greatest likelihood of holding up under less than optimal economic conditions. Third, by cutting muscle, you will damage your long-term competitiveness, and you will cripple your ability to gain dominance in your chosen markets.
Are there any key relationships you should tap to help you get through the slow economic times?
Are there key suppliers who can work with you to lower costs, speed up deliveries of your products or services?
Are there key customers who can help you by giving your company a long term commitment for specific products or services you provide them?
Is there something your employees can contribute to reducing costs or improving your products, costs, deliveries, inventory levels, services, lead times, etc.?
Is there something one of your technology suppliers can suggest which will lower your costs or improve your processes, deliveries or services?
Each of these relationships should be investigated for what can be mined quickly and economically for the immediate and long-term benefit of the company and of the supplier or customer.
BASICS: OUR CORE BUSINESS
Look at how you have done in your core business. This is the backbone of your success. How has each segment of your business contributed to effective use of your resources? What do you need to do to assure that your core is strong and viable? You must first concentrate on the elements that have brought you to the position you have earned.