It is tough to run a business right now as a leader but there are still opportunities to be had. In tough times the strong get stronger and the weak fade away.
We have had tough times before and each have been different. This time around we are dealing with a pandemic, wars, energy crisis, attraction / retention of people and rapidly increasing costs of doing business. Most leaders are unsure what to do so they have adopted a very conservative approach and are focusing on cost reduction only. While we don’t disagree with that approach there is an entrepreneurial slant that can be taken.
Below are five simple yet powerful strategies that you could use to leverage today’s challenges to your advantage as a leader in your business.
1.Cut costs
By all means cut costs but that doesn’t mean just going through your profit and loss or balance sheet and getting rid of any cost you can. Anything strategic, any item that adds to process efficiency, customer satisfaction, and employee engagement, needs to be protected from cuts. Unprofitable customers and products/services are normally not considered in this process and they should be. It is not uncommon to find that one third of your customers result in a loss of profit. Why not look for ways that you could make them profitable and then, if you can’t reach a satisfactory profit level, put your price up to them significantly. If they stay they contribute to profit but if they go they still contribute to profit. You can’t lose. Do the same with your products/services. Don’t cut them blindly, look for ways to increase their profitability first, only then remove them if you can’t find a way to increase the profit for each product and service.
- Increase prices
Consider increasing prices across the board, most people are doing this at the moment. You will need to justify why you are doing it but your customers will understand. There is a cost of changing suppliers that your customer will consider when reviewing your price increase. Most people do not want to change suppliers at the moment. You can use the uncertainty and reluctance to change to your advantage.
- Cash flow
Cash is always king but today even more so. Can you pre-bill customers? Can you change your payment terms? Can you increase your working capital with your financiers? The last thing you need to worry about right now is cash flow so take it out of play by fixing it both now and the future. This frees your energy up to do a better job of servicing customers, working closely with your supply chain, and motivating your team members.
- Increase engagement
When reviewing your customers, supply chain partners, and team members consider engagement as a key factor. You will probably find that one third of each group are engaged, the next third neutral, and the final third not engaged. Develop a plan to maintain the engaged group and get the other two thirds significantly better engaged. We would suggest a one page plan for all key customers, suppliers, and team members that specifies what you will do to significantly lift the engagement of each. The key strategic elements for this plan include communication, support, value, mutual benefit, maybe even more fun. Don’t ignore any of these groups, they are the key to your success.
- Focus on the medium to long term vision
You should assume that the challenging time will continue for at least another two years. Therefore, now is the perfect time to review the vision looking out two-three years you have for your business. What is our purpose, what products / services will you sell, who are our target customers, what markets do we want to be in, what do we say no to, what will be our pricing, how do we lock in profit, and how will we grow?
Once you get clarity on these questions then you can ask yourself, who do you need to help you, what skills and capabilities do they need, what processes will give you efficiency, what technology should you use, and what can go wrong, where are the risks? If you can answer each of these questions you will have a vision for the medium to long term. The next challenge is to protect that plan, keep monitoring the market and your performance, and make changes to the plan to achieve growth and mitigate risk. Having a well communicated vision will assist in your attraction and retention of team members as well as creating a unique sustainable competitive advantage for your business.
Contact us if you’d like to explore these strategies further.