I’m not going to posit about whether we’re in a recession or not. Everyone else is already doing it. So let’s say we’re currently in an economic slowdown and leave it at that.
Slowdown, recession or anywhere in between, you have to stay on your feet – don’t allow yourself to succumb to conservative ways of running your business.
In an article in Business Week, Bruce Nussbaum writes about 10 innovation mistakes to avoid during a recession. I found the article an interesting read and have a few key takeaways that are relevant to small businesses. Here are some of Bruce’s mistakes to avoid and my thoughts:
Fire talent – your best employees may also be your most expensive. Don’t sacrifice them to save on payroll dollars as your sales will suffer as well. Get rid of lower priced talent if you’re going to cut payroll so you can maintain your topline sales.
Cut back on technology – While technology can bog us down, it’s there to help us become more efficient and better at what we do. If you were going to put in a new point of sale system, then put it in. Your business will only be better as you manage inventory more tightly, resulting in more working capital – exactly what you need during an economic downturn.
Stop new product development – Keep moving forward as if you were in an economic boom. Don’t stop looking for and bringing in new products, or developing your own private label line. Just because customers may be shopping less doesn’t mean they’re not aware of and looking for the latest and greatest products.
CEOs replace innovation as key strategy – it’s retail. It always changes. Don’t let the economy stop you from continuing to evolve your concept. If you take your foot off the gas, you’ll fall behind your competitors, one of whom will surely keep moving forward, leaving you on the side of the road like road kill.
Retreat into walled castles – this is the mostly deadly strategy. Don’t pull a Wizard of Oz and beat a path toward the cellar, locking out the world until the storm passes – you’ll miss the fantastic adventure that Dorothy got to experience.
THE REAL WORLD RETAILING TAKEAWAY
See the glass as half full. Keep moving forward, fighting your notion to retrench.
Too often we cut back on everything, trying to conserve cash and that just chokes off the business. If the topline isn’t there, then you’re not making any money anyway.
It comes down to NEED TO HAVE versus NICE TO HAVE
Every budget has line items and initiatives that are “need to have” versus “nice to have”. Start by identifying every expendable expense line item that doesn’t keep the doors open. That’s your pool of opportunity pool that you can potentially cut. Just work your way through the list, identifying the items that you absolutely need to have to keep the business moving forward (certain marketing initiatives, a trip to the annual trade show, that new IT software – they all help keep the business moving forward). Don’t cut those items.
Operate through these tough times keeping a mindful eye on your business every single day. Then shift your strategy as you need to, based on what is or isn’t happening with your business. It’s the only way to ensure your long-term financial stability.
It’s certainly more work to run a business in a slowdown vs. in a boom time. But this is where you become a much smarter entrepreneur. Operate under the “glass is half full” philosophy and embrace the opportunity to become more savvy in running your business. It’s during these times that true leaders emerge.
How are you going to weather the storm?