By Kristopher B. Jones, a serial entrepreneur and investor. Kris is the founder of 2020 SEO Agency of the Year Finalist LSEO.com.
Being a business leader for the long term means you're going to see successes and failures. I don't view any period of sustained success as being permanent. Events beyond your control are probably going to happen to spoil those good runs you've been enjoying.
The trick is to see your business through those dark eras, market downturns and other ruts that wreak havoc on pretty much everything.
Here are three tips for navigating your business through the hard times.
1. Consider hiring a controller.
It may seem counterintuitive, but during a downturn, one of the first things you may want to do -- particularly if you are a small or medium-sized business -- is to consider making a certain new hire.
That hire should be a controller or chief financial officer (CFO), and you should get that person on board sooner rather than later. The reason for this is that you need to button up your financial controls and minimize as much risk as you can so you can learn how to be lean during a trouble spot.
Poor financial controls are one of the main reasons -- if not the top reason -- that businesses fail to live up to their potential. Having a financial controller will also allow you to do a lot of work in-house that you might currently outsource to an accountant.
Your finances become more important than ever during a downturn. You should entrust them to a seasoned professional.
2. Always project.
This is sound business advice for any season, but especially during a downturn: Make sure that you have monthly, quarterly and annual financial projections in place. Get into the habit of making and hitting those projections. It's this kind of discipline that can see you through the suspense of unstable economic periods.
Of course, you should also be realistic in your goal-setting. A market downturn clouds things a bit as far as being able to say what a reasonable financial projection should be. Never stop being aggressive in achieving the goals you think are attainable during the most uncertain of times.
3. Examine current resources.
While you are making those forecasts and pursuing sales, you should also keep a watchful eye on your current resource allocation. Can you move resources from certain lower-profit areas to higher-performing sectors?
After looking at those areas of your business, carefully inspect your staffing levels and expenses. What "fat" can you cut to improve earnings before interest, taxes, depreciation and amortization (EBITDA)? How can you increase margins and overall profit?
In addition, if you've been in business for any amount of time, you know how expensive it can be to make a new hire as opposed to upgrading current staff with new skills. As you consider hiring new employees, ask yourself, "Can I get better performance from existing staff before I hire new staff?"
If the answer is yes, then this is a good place to save money while also bolstering your company's ability to deliver results.
It's an understatement: Economic downturns are tough on everybody. If you're a young entrepreneur and you've encountered your first such period, remember first not to panic. Businesspeople have weathered these storms before, and they will continue to do so.
Believe me when I tell you that the tips above come from experience -- lessons learned the hard way. The tough decisions you make now could be the difference between becoming another victim of a downturn and coming out of this period like a coiled spring.
And the power to make those choices is all in your hands.