As we experience interruptions and curved balls in our businesses, it struck me that where we find ourselves now is not very different to where we were in early 2020 at the start of the pandemic.
The major difference is that the pandemic brought about a sudden existential threat to life as we had known it at the time, whereas, where we find ourselves now is because of a series of “shocks” or challenges, that, if put together result in a major loss of confidence. It is a classic example of the frog in the water container that is being warmed up; at first, we don’t really notice the change in temperature, until it is too late.
In a recent article last week, the latest Business Confidence Index was shown to be at the same level that we were 1-2 months into the pandemic.
Looking back at the approach we took to leading our teams and businesses through those times, there is a lot to be said about taking the same approach and single-minded focus to driving growth currently versus “surviving and thriving” during the pandemic.
As such I want to highlight several points for all business owners and leaders to focus on currently in order to provide hope to our people and to drive growth in this market.
Whilst communication is always critical in business, as we navigate challenging times, we need to ensure that we develop a clear communication plan for all stakeholder groups in our businesses.
- Customers – particularly for your A and B level Customers.
- Suppliers. It is important for them to know what your plans are, for you to understand their constraints (if any) when delivering to you so that you can plan if you need to make changes. Look for alternative suppliers where there are risks.
- Employees. Many people are facing uncertain times, be they financial pressures because of increased inflation or interest rates. Keep them informed of what is going on in the business and what the business’s plans for growth are. Provide them with a sense of security and hope.
- Your Bank or Financial Institution. They need to understand your business and how you plan to react to the changes in the economy, so that they can ascertain how they are able to provide you with the required support. Be that to fund rapid growth or to provide funding to manage challenging cashflow.
- Be Positive
As the leader in the business, you need to ensure that you are walking and talking a positive but realistic message to all the people you encounter. Be the light, the beacon of hope to your employees, customers, and suppliers. This means that you need to look for any positive signals to share and communicate. Do not fall into the trap of negative talk, of gossip, or defeat.
- Understand the Business Cycles
We need to remind ourselves that there will always be business cycles. Summer, Autumn, Winter, and Spring. It is fair to say that many businesses (unless we are in business that is experiencing rapid growth) are experiencing the winter cycle. How do we adapt the business to that cycle so that we are able to prepare for when the seasons change, as they always will. Communicate the seasons to your team.
- Manage the Change
As the leader, what changes are you planning to make to the business currently? – be it in a growth business or a business that is finding times challenging. We need to recognise, that many of the people that we work with can manage or are able to adapt to change, yet for many it is not in their nature to manage change. Recognise this and ensure that we have a plan to bring all our people with us on the journey as far as possible.
- Develop and implement a focused business plan.
This is self-explanatory. Developing and focusing on no more than 3-5 core issues or wildly important goals is mandatory during times of uncertainty.
- Make Cashflow a critical priority
Businesses do not go out of business because of a lack of profit, they go out of business because of a lack of cashflow. Identify the key levers driving cashflow. There are generally 7 key levers to drive cashflow and implementing incremental change across each of these will have a compounding effect across the business. These are:
- Volume Growth
- COGS/ Direct Costs
- Overhead Costs
- Accounts Receivable
- Inventory or WIP
- Accounts Payable
- Review all business practices to drive efficiencies.
Whilst it is very important to look for opportunities to improve efficiencies in all business cycles, the reality is that many business leaders do not focus on efficiencies when times are good. Now is a perfect opportunity to review all business practices and to ask whether they are adding value to you currently.
- Focused Marketing Plans
Many businesses make the decision to drop or cut marketing expenses during tough economic cycles, when in fact it is the one time that we need to invest more efficiently in our marketing. Be clear about our marketing message, our cornerstones of distinction or USP and our target market. At the same time, review our marketing numbers on a regular (weekly) basis to ascertain whether we are getting the value that we require to drive growth. Manage both the lead and lag indicators and adjust quickly where required.
- Manage the 5 levers of growth for any business.
All businesses need to focus on the 5 levers that drive growth:
- Lead Generation
- Conversion Rates
- Average number of transactions during the period
- Average Transaction Size per Customer
As mentioned in point 6 above, making planned improvements in each of these areas have a compounding effect to profitability.
- Enjoy the personal growth you will experience during this time
The one thing that we all benefit from when leading businesses through uncertain times is the lessons and personal growth, we have the privilege of experiencing in each cycle that we go through. Be intentional about our growth, document it, communicate it and make ourselves available for more of it.
In summary, this is the ideal time to focus on the controllable factors in business and not get caught up in the uncontrollable.
ENJOY THE RIDE – IT IS A PRIVILEGE AND A BLESSING