Best Tips for Managing in a Downturn
A Downturn is a difficult time for a company. Not only are sales slowing down, but many companies also have to cut spending and lay off employees. For some entrepreneurs, this is the low point of their career or business. For others, it is a chance to restructure the company and revitalize sales. In either case, if your business is in a downturn, there are a few things you can do to help you out of it. AMB Performance Group is here with useful tips for managing in a downturn.
5 Tips for Managing in a Downturn
Look for Easy Value-Adds
Here’s a good example: in the past few years, web hosting companies have changed their offerings. Many now offer value-added services such as email, anti-spam, and website monitoring tools. The best way to differentiate yourself from the competition is to give some extra value to your customers. An easy way to do this is by offering a service plan that helps you retain customers who would have otherwise left your business. Oftentimes, people stick with what they are familiar with if it is convenient. So, regardless of what you offer, or what you sell, look for ways to offer your clients more value within your vertical. What service could you easily add that your clients or customers would also use?
Discounts were once a great way to stimulate sales, but some companies have stopped using these tactics in the past few years. Some even go the opposite direction. Stay with us: creating a ‘premium’ or ‘plus’ good or service from your baseline offerings is an easy way to make the baseline offerings more attractive to cost-conscious clients/customers. The people you should offer discounts to? Your customers who are referring new people to your business, and your most loyal. Creating a loyalty program is a good way to make sure you are giving the right people the best prices.
Many companies are cutting costs so profoundly that they are forced to lay off employees. In the past few years, most companies have taken the easy route and laid off many full-time employees to save money. If you are a public company, that could reduce consumer confidence, and if you are a private company, you could be harming employee morale more than you are helping your budget. If your business is facing layoffs and you have decided to reduce your payroll, then you must know where you can reduce costs. For example, can you reduce your payroll by 30% without laying off employees? Can you save money by cutting salaries and not replacing people who leave or retire? These steps can be tricky and nuanced, but they can be done. If you need to lay people off, look at the positions that are not essential for the current business climate, and ensure that the remaining people are productive. If everyone on your staff is not contributing to profit, then there will be little you can do to help the company turn around.
As mentioned earlier, many companies are laying off employees. To reduce your expenses, you must ask yourself what part of the business is the most expensive for you to maintain. Once you have gone through the departments and identified those areas that are not driving profit, or that don’t add as much value, you can choose to eliminate them. For example, if your business has a large advertising budget, you can cut that out and focus on other marketing strategies that could reduce costs. You can also cut back on unprofitable services such as phone support so that you do not have to hire more employees.
Some companies experience declining sales due to an unpopular product or service in the mix. If one of your products or services is not selling, you will have to rethink your offering line and decide what items to remove from it. To reduce the price of your product/service, you can redesign it so that it is cheaper to offer or produce. For example, a software company could reallocate resources for the mobile market instead of continuing to provide downloadable versions for laptops and desktops. Either way, you must evaluate your current sales figures and decide what products or services are doing best and which ones are doing worst.
As you can see, there are a few things that you can do to turn your business around. The hardest part of managing in a downturn is making tough decisions. Sometimes it can feel like there are no good choices, and you have to pick the least harmful, the best of the worst. That comes with the territory, but the best managers find ways to create positive momentum and properly maximize the strengths of their business. If your customers are happy with how your company interacts with them, they are more likely to buy from you. If you are looking for someone with decades of management experience to help you make the right decisions for your business, then get in touch with us today.