Bouncing back from a financial crisis, product default, or natural disaster is difficult but not impossible. Focus on fixing the problem and finding opportunities for growth.
You may be facing your share of woes from financial problems to employee shortages to increased competition. Just because those setbacks are occurring and you are struggling to survive, doesn't mean you can't turn your circumstance around. If you take a new look at your company and the situation you are in, you may very well find some opportunities for growth and success.
That has been the experience for Anne Houlihan, president of Satori Seal, an industrial parts supplier in Rancho Cucamonga, California. "My company was down 35 percent in June 2009 and within 10 months, by April 2010, we were ahead 1 percent. We looked to reduce overhead but really focused on what industries were busy in these tough economic times," she explains. So, "even though automotive was dying the medical industry was thriving. We targeted that market." After Hurricane Katrina struck, the company benefited from relationships with clients in housing construction, another example of how to expand or embrace opportunities during a crisis or setback, Houlihan points out.
Don't get stuck agonizing over what went wrong. A setback isn't a permanent retreat unless you stay there. You can make the most of a bad situation or you can make matters worse. Don't avoid the problem, take decisive actions. Not just swift action, but a well thought out plan of action to stage a successful comeback, advises Erika Hayes James, PhD, an associate professor at the University of Virginia Darden School of Business and co-author of Leading Under Pressure: From Surviving to Thriving Before, During and After a Crisis.
Let employees, customers, and suppliers know about your game plan. "The biggest mistake owners make is not communicating poorly but not communicating at all," says James. "With BP it was the communications that was the downfall of their crisis handling not the technical things that they were doing to stop the spill, the flow of oil."
There are plenty of stories of corporations that have come back after business downturns, natural disasters, product recalls, or corporate scandal. Genworth Financial and Ford Motor Company are prime examples, says James.
"You have to make sure that you understand the root cause of the setbacks. Determine if it something that you can actually fix or not," says Houlihan, who also is the founder of Los Angeles-based Golden Key Leadership, a consulting, coaching and training company. "You may very well have to sell it (the business) or shut it down."
There are several ways to react to a setback, some helpful and some not. Here are seven things you can do to turn around your company after hard times hit.
1. Assemble Your Crisis Management Team
Create a committee of people to address the crisis or setback. It doesn't matter if it is three or ten people; it's your key executives, says Lisa M. Poulin, a certified turnaround professional and president of the Turnaround Management Association. "Decide if you need to bring in someone from the outside, either a new executive or a consulting firm. Come up with a strategy on how you are going to approach the problem, which may be tactical, operational, or legal. Formally agree on the implementation."
Throughout the various life cycles of the business it is important to build relationships internally and externally so that you have some collaborative people who can help you with a set of company challenges, says James. If you don't have a management team, tap into your personal and professional sources for guidance such as a mentor, an agency like SCORE or regional Small Business Development Centers.
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2. Communicate With Customers and Employees
Don't be reluctant to confront bad news. Develop a strategy to disseminate information. Are you going to have weekly conference calls, meetings, and so forth? It may not just be customers you need to talk to but also key suppliers or vendors, says Poulin. "How many of your constituents will be impacted by this situation. For example, with a product recall it's not just the customer who is affected you have a whole distribution chain." Moreover, you have to engage your employees, says Poulin. Listen to your staff and address any specific challenges they face. "Keep them up to par with what is going on; even you don't have all of the answers."
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3. Conduct Overall Cost Analysis
Look at where you can reduce overhead. Negotiate with suppliers for a better price. Find ways to save money. Cut back on inventory if you have a bunch of product that doesn't sell. But don't take the easy way out, cautions James. "Companies think that because headcount is the biggest line item on their budget then that's where they should cut costs. Getting rid of employees is the easiest strategy but it might not be the right one," she says. "Layoffs are generally a reaction versus a well thought out strategy. You don't want to cut so deep that it hurts your company."
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4. Take Stock of Your Marketing Strategy
Your existing customers are your No. 1 asset. Always know where your customers stand, says Houlihan, noting that about 80 percent of your revenues come from about 20 percent of your customers. Fine-tune your marketing if you want to attract new customers and retain existing ones. Tweak all your marketing messages, including your web site, brochures, and sales letters. Don't just sell a customer the same product. Even if someone has been a customer for years they may not be familiar with all you offer. Stay connected with customers via surveys and other customer awareness tools. Ask what do you need, how are we being responsive, and what can we do differently to better serve you?
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