Oct 19, 2010

7 Tips for Dealing With a Company Setback

 

5. Empower Your Employees

Find ways to increase moral and empower employees to be the best that they can be. Show that you value their input and opinions. "Happy employees take care of customers," says Houlihan. "Your employees are an important asset because they are in direct communication with customers. Motivated employees attract more satisfied customers which in turn lead to increased profits." 

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6. Seek Out Growth Opportunities

A set back can be a prime time for growth. In general, there is always business that you are going to lose. But always prepare for growth and ways to expand. You have to identify and help manifest opportunities during a crisis or setback. Do damage control but if you just focus on fixing the problems, then you leave opportunity, value, and the possibility for creativity on the table, says James.

Change or a setback could in fact force you not to be complacent. Pay attention to changing environments and new technologies that could make what your company does obsolete. Don't just stay on top of the competition but try to continually reinvent your business or technology so that you are staying ahead of the game instead of trying to play catch-up.

The movie rental business is one example. Blockbuster responded at a snaillike pace to competition from NetFlix's online model and Redbox's $1 video kiosks. Not only did Blockbuster fail to see Netflix as a threat it alienated customers with its late fee policies. Blockbuster also underestimated consumers' willingness to order videos online and receive them in the mail or to stream video from the web directly to their computers.

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7. Embrace Change

"Most people are not good at taking risks when they are threatened. We have a tendency to react by fright or flight," says James. "We become very defensive. That can limit your ability to try new things that could lead you out of a setback or crisis situation." You should be asking: What can we learn from these challenges so that we do things differently or better or we create a new product or innovation? Have a big picture vision of what the company should look like post setback.

Since 2004, Brennan G. Proctor, the founder of Uncle Brutha Gourmet Foods, has been bringing the heat to the Washington, DC area with his hot sauces, bottles No. 9 and No. 10—an award-wining blend of four peppers. Recently the business has been beset with challenges after Proctor was forced to close the company's only store two years ago due to a fire. Uncle Brutha's Hot Sauce Emporium was located in the highly foot trafficked area of Eastern Market stocking not only its product but hundreds of other hot sauces.

The closing set Uncle Brutha's back financially about $200,000 and took a toll physically on Proctor with the added stress. But it forced Proctor to take stock of himself and his company. "I realized that my venture really was not about opening a retail store. It was about the product. I was still getting calls about where can I get Uncle Brutha's hot sauces. I still had my clients and retailers," he says. "I found ways to work around the loss of the store and the debt that was incurred as a result." Making matters worse was that previous funding sources had dried up because of the major Wall Street crash. Some banks even started calling in existing loans.

One strategic move Proctor made was to switch production from a company in Lancaster, Pennsylvania that had become difficult working with to a packaging company in Alexandria, Virginia that offered better quality, consistency, and smaller batches plus local connections. "Because demand was still up the new company was willing to work with me to keep the product in production, to grow my client base, and increase market share."

Proctor is pushing gallons of hot sauce through distribution channels such as Whole Foods Market Stores, a local Co-Op, and area restaurants. He also has some notable followers including Celebrity Chef "Rock" Harper, Season 3 winner of the reality TV show Hell's Kitchen.

Uncle Brutha is still paying off debts from the store's closing, but Proctor is slowing getting the business back on its feet and is embracing new opportunities for expansion. He is using social media, e-mail newsletters, and the Web to market the product and create awareness among new and existing customers. You can find Uncle Brutha on Facebook, follow Uncle Brutha on Twitter and shop for Uncle Brutha's hot sauces online. Proctor is even orchestrating a hot wings competition. "The business is still in the recovery mode; 2010 is better than 2009. I am cautiously optimistic," he says.

Proctor knows firsthand that when faced with a company setback it's necessary to stay positive: look at what is working; be proactive: find new growth opportunities; and persevere: hang in there and ride out the storm.

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