Here is an EXCELLENT short-list of action steps for the rest of the economic downturn heading into recovery:
- Love your customers. Get closer to them than you have ever been; understand and aggressively address their issues. In a poor economy, competition will increasingly be based on price, so that you need to be able to articulate your value proposition in order to justify holding your prices above the competition’s, or to be able to just hold on to the business;
- Love your bankers. Communicate with them; let them know what you are doing. Convince them that you are thinking about them and you will do whatever it takes to make sure their loans are repaid. The biggest mistake companies make with bankers is not staying in constant communication with them and then at the last minute surprising them with bad news. Debt will be difficult to obtain so make sure your credibility and communications are in place so that you will be in line to get your share. Keep your loans in good repair – do not bust covenants. Bankers will be less forgiving in this environment;
- Love your shareholders. It is much easier to get additional capital from people who know you than from people who do not know you;
- Love your employees, particularly your key employees. Although unemployment will increase, there will continue to be demand for key people and for people having skills that are in short supply. Your employees will feel insecure about the company and about their jobs. Keep them informed and involved in the process so that they do not make an uninformed decision to leave your company.
- Be relentlessly focused and realistic about your business and its prospects. You are now in survival mode and you need to be clear about what it takes to survive. Review your business strategy and value proposition to ensure they are in line with the needs of the current market environment;
- Cut costs, cut costs again, and cut costs for the third time;
- Watch your customers’ credit rating and payment history. Most will attempt to use you as a financing source and it is likely that several will fail.
- Review your payables policies. Take full advantage of the time your vendors will allow you to pay and pay just before you endanger critical relationships.
- Consider alternative sources of financing, such as asset-based lenders.
- Look for opportunities – crises breed extraordinary opportunities.
Source: Bill Patterson and Kit Webster, BridgePoint Consulting, Inc.
Hat Tip to Paul Wright for the link!