Posted: Thu 29th Dec 2022
The word recession is a scary word, not only for the obvious financial implications, but also because of the impact on our mental health and general wellbeing.
As business owners ourselves, we know it is far too easy to fall into the negativity trap - even if we don’t mean to.
In difficult times fear, more than real circumstances, can paralyse us.
In this article, we talk about strategies to grow your business in uncertain times.
Focus on what you can control
To avoid being overwhelmed, acknowledge the things that are outside your control and focus on what you can control, like preserving cash flow.
Maintain a steady cash flow by ensuring your current client base is satisfied with your company’s products or services.
Find ways to reduce variable costs that will not affect your business' long-term growth strategy.
Many businesses immediately reduce their marketing spend, however, a slightly different approach is to dig deeper and understand what's working and what's not and eliminate unproductive activities.
Engage in conversations with your suppliers and review contracts if necessary.
By focusing your efforts on variables within your control, you’ll be in a better position to deal with unpredictable variables.
A flexible business plan
This means revisiting and revising your current business plan to make it flexible and dynamic based on the current data available.
Many business owners tend to create a business plan which is safely saved in their desk drawer, when it should be a live document that you review regularly against your results.
Have you got a business plan? When was the last time you reviewed it? Are you on track? Are the current circumstances reflected in your plan?
Communicate, communicate, communicate
In times of uncertainty, effective communication is vital to keep your company running smoothly. It’s important to focus on both internal and external communication
Internally, ensure that your team buys into and believes in the business plan for the future.
Externally, ensure that your suppliers understand where you plan to take the business, in order to align their business with your goals.
Make sure that you increase your communication with your customers so that they know your brand, product USP, or promise. Never let your competitors get an opportunity to own your hard-won rapport with your customers.
Transparent communication is key to building trust in the team and maintaining good client relations when faced with the unknown.
Risk management plan
It’s always better to be as prepared as possible, even when markets are stable, so having a risk management plan can help mitigate consequences when things go wrong.
To create a plan, brainstorm all the potential risks that your business may encounter, and measure their levels of risk based on likelihood and amount of impact. Then, determine ways to deal with the risks by applying one of these common strategies:
avoid the risk entirely
reduce the level of risk by taking steps to minimise potential negative impacts or reduce the likelihood of a negative outcome
accept the risk as a regular business occurrence and go ahead with the plan
While a risk management plan can’t make your business 'disaster-proof', having a sound plan will definitely help preserve the longevity of your business.
Know your numbers
During uncertain times, it’s more important than ever to know your key financial numbers and other KPIs, in order to make changes quickly.
Which numbers? It will depend on your business but below you will find some ideas:
cash flow availability and forecast
number of leads
conversion rates (= number of customers)
average transaction size
number of transactions over a given period (= revenue)
margins (= profit)
sales team KPIs: sales team performance should be measured daily to ensure a correct balance between "lead' and "lag' indicators in the sales process.
In relation to cash flow, how much money do you have in the bank? The frequency of auditing will depend on the industry and product/service, but reviewing it weekly will definitely keep you out of trouble and you will sleep better at night.
Review your debtors' books weekly and take the necessary action against late payers or non-payers. In your customer relationship system (CRM) it's a good idea to include an indicator.
Renegotiate your suppliers' terms where possible and check cost structure. Identify unnecessary costs in your business, while making sufficient provision for marketing costs.
Be flexible and pivot
Pivoting is what many businesses were forced to do with the pandemic - some jumped at the opportunity from the beginning, while others waited and when things didn't go back to normal, didn't have another choice.
In both cases, having a dynamic business plan, understanding potential risks and knowing your numbers, will allow you to keep flexible and pivot if you find new viable markets or ideas.
Support your team
In times of uncertainty, your team needs a strong leader more than ever.
As a leader, it is your job to balance transparency and hope by being realistic with the team, while also offering hope by laying out a vision for the future.
Acknowledge the challenges and define strategies that will help overcome those challenges.
It’s also important to lead with empathy and show your team members how much they are valued.
Take time to check up on each team member's wellbeing, create a flexible and supportive workplace environment, and provide staff with the tools or training they need to succeed.
Building a resilient team by overcoming adversity together can bring big payoffs in the future.
Manage your time
Now more than ever, you need to evaluate how you are spending your time to ensure that you and your team are focused on delivering growth and a superior customer experience.
As a business owner, you have three roles: the entrepreneur, the employee and the leader/manager.
Most business owners get stuck in the employee role, even when they have a team around them. Some reasons for that are 'no one can do the work at the same standard you do' or 'you don’t have time for training or simply you are too busy to notice'.
Either way, this is the moment when you, as business owners, need to step back into the entrepreneur role to look for opportunities, while at the same time continuing to work on your business and reassuring your customers, your team and your suppliers.
Your processes are your way of doing business
You will not get your company to the next level by keeping your processes in your head and winging it as you go.
Most business owners don’t understand how powerful 'your way of doing business' can be.
When you apply it correctly, it works like magic, resulting in simplicity, scalability, efficiency and profitability.
In the last eighteen months, we have found out that the most frequent reason for business owners being stuck on their employee role is that only they can deliver the customer experience their customers are used to and it’s usually their unique selling point.
So ask yourself:
have you documented the way you want everything done in your organisation?
do your people know what processes they are following and why?
are they all executing the required procedures uniformly?
did you provide training to ensure the impact of not implementing the processes correctly?
By deciding what the process is and training everyone to follow it, you will enhance your troubleshooting abilities, reduce your errors, improve efficiency, and increase your bottom line.
It was the American philosopher and psychologist, William James, who first said, “no decision is, in itself, a decision.”
So, decide at least on one of the strategies above, and focus your energy on the things you can influence.
You can connect with Susana on Enterprise Nation now for more tailored business support.