Living in Houston for the past 20 years we are pretty much used to seeing oil prices go up and down and how it affects our local economy. Similar to 2008, we are experiencing massive layoff and many businesses are experiencing business decline. If I’ve learned anything during these ebbs and flows, it’s not to panic. Here are five keys that I use to guiding my clients through these trying times.
One, don’t panic! Chicken Little was wrong! The sky is not falling; this too will pass! If you are living your calling and following God’s plan trust Him! Remember the words in 2 Timothy 1:7, “For God has not given us a spirit of fear, but of power and of love and of a sound mind.” Also Jeremiah 29:11, “For I know the plans I have for you, declares the Lord, plans to prosper you and not to harm you, plans to give you hope and a future.”
Spend time in God’s word, pray for peace, confidence and direction. Remember the bumper sticker that reads: “As long as there are tests, there will always be prayer in school? Well same applies in business!
Two, reach out! Reach out to every customer past and present. Ask how they are being affected by the downturn, offer to help if you can. Offer extended payment terms? Look for ways to add value or additional services without increasing prices? Let them know you are standing with them and will be there when the economy improves. I know of one company that offered to lower prices during the slow down to their best customers to ease the pain.
Reach out to vendors and subcontractors to let them know if you need to delay a payment or payments. Keep them informed. Reach out to your banker, extend your LOC if you can. Keep them informed so there are no surprises!
Three, expand! Look for underserved markets that are related to markets that you currently serve. Keep in mind that some companies, your competitors, that don’t have your fortitude and won’t survive. Have a plan to step in and pick up their best clients. Look for possible opportunities to merge or acquire your biggest competitor.
Four, market your business! Look for marketing opportunities’ and focus on specific underserved markets or areas you would like to penetrate further. Keep in mind that companies that hunker down or worse, take a “head in the sand” approach will take five years to regain lost market shares after the turnaround!
Five, examine cost! This is the one action everyone thinks about first but I urge caution here. Don’t overreact, make good choices. Look for ways to eliminate waste, inefficient processes, outdated procedures, examine everything! Evaluate your employee’s performance, if you do have to let someone go you will at least have something to guide your decisions. Avoid “sacred cows” even if it’s your brother in law or your sister’s kid. It may be time to allow them to make some other company successful! Have a plan in phases; cut cost, eliminate waste, downsize your staff in stages. Low performers first, cut the fat not the bone!
One way to increase profitability is to examine your business units, focus on the most profitable, look at the ROR (return on resources). Shut down the cash drains, reduce your efforts in the low margin units.
Always stay focused, stay positive, have a plan and trust in the Lord! He is faithful! Isaiah 40:31, “but those who hope in the Lord will renew their strength. They will soar on wings like eagles; they will run and not grow weary, they will walk and not be faint.”