It's doom and gloom out there, and it's not just Chicken Little saying the sky's falling -- even Warren Buffet says we're in a recession. If that's got you concerned about 2008 revenue, that doesn't mean you're a pessimist. You're a realist. Being an eternal optimist myself (my strength and Achilles heal), here's how we are proactively attacking the future. We are not circling the wagons!
That's right, despite -- or actually because of -- the bleak economic outlook for 2008, we're investing in key strategic initiatives that will help us in the future. The last thing anyone should do in a down market is cut, cut, cut. All you're doing by doing that is hastening the inevitable. But that's probably what your competition is doing, which is a golden opportunity for you if you play your cards right.
Going into 2008, we freed up two million in cash to invest in key strategic initiatives. And yes, if you're new to this blog, that included a reduction in force of 21 people in December. It wasn't a pretty thing, but outside of getting blood from a turnip our options were limited coming out of flat sales. Now, instead of circling the proverbial wagons in 2008, we're in the early stages of a Herculean organizational-wide effort to change our IT operating system, which is a capital investment of more than a million dollars. The additional investments are for training our new distributors, upgrading our website, making key hires, and developing new products for the future.
It's important to note that when we did the reduction in force, we didn't just cut 15% of the people. Many companies do this, and it is a huge mistake because the remaining 85% of the people are left to do the same amount of work and are told to just work harder. Trying to do more with less is a surefire way to do things wrong, burn out your people, or waste efforts better invested elsewhere. Instead we reviewed all our initiatives and determined which no longer make sense or are not getting as big a return on investment as some of the other key initiatives that we want to execute. So we eliminated initiatives that no longer made sense. Hey I loved our magazine, Aquascape Lifestyles, as much if not more than the next guy, but when we discontinued the magazine we correspondingly reduced our workforce. So we slaughtered sacred cows and freed up scarce resources to be used elsewhere.
The moral of the story? In a down market you must resist the urge to circle the wagons. You need to send out pioneers into new markets, while reinvesting in core strategic initiatives. In order to do that, when sales are unpredictable at best, you need to eliminate areas that may have great sentimental value -- pet projects, people, and status quo modes of operating. And if you do it wisely, you'll end up healthier, happier, and possibly even more prosperous than when the cow was fat. Adversity shapes us as people, and a down economy forces a business to get leaner and stronger. That is, providing you're willing to do the hard things in running your business, and not just circle the wagons!
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