Having had to weather the storms of recession several times in my business career, I learned some very useful lessons that may be beneficial reminders to all of us. For those of us on the Gulf Coast, the “storm” terminology hits home. Positioning for a possible financial crisis is very similar to our preparation for Hurricane Ike—watching latitude and longitude and mph until it “hit.” At that point, we just had to “hunker” down and plan our recovery. Many of us are in “hunker down” mode now financially. Regardless of what you are doing for storm preparation, be aware that your customers have been taking a number of steps to weather the economy, and you can be a part of their solution—not part of their problem. Anticipate and prepare so that you will not only survive, but you will thrive.
Do your customers believe we are still in a recession? That is all that matters right now. This is an excellent question to ask during your one-on-one opportunities. It is best to get proactive and upfront with both the customer and your company in dealing with issues like this. The most important issues would be the following:
Customer Retention: Using the 80/20 rule protects your base. Have you developed a proactive plan to go to customers in terms of cost reduction or additional sales? Do everything you can to communicate with and listen to customers in an effort to counter their feelings that they must discontinue using you or decrease their orders drastically to deal with a recession. Try to take on additional services and save them money at all turns, keeping them aware of your efforts to save them dollars. Become more valuable and indispensable.
o Communicate with customers constantly to determine their feelings. Listen to what they are saying and make every effort to understand their needs. M ake it difficult for them to consider decreasing your services.
o Know where their budget dollars are and how you can work with them (i.e.; different classifications/ coding).
Sales: Go on the offensive; that is, after low-hanging fruit from potential customers that you know are affected by the recession. Have your presentation demonstrating the value/savings you “bring to the table.” Think about what companies have been affected and direct your outside sales force to go after them.
o Try to grow your way out of this dilemma also through selling of additional services and/ or products. (continued on the following page)
Cash/collection for your company: Cash is the “lifeblood” and must be protected. Watch customers with slow pays. Go out and pick up the check as opposed to having them send it in the mail. Make collections an issue with the customer if/ when you need to.
o This is another opportunity to bond with the customer and listen to their needs.
o Make sure your contracts are in good shape and cover slow pays and lessened services.
Banking Relations: Continue to solidify your relationships, and confirm your bank’s stability.
o Revisit your revolving line of credit. o Implement regular cash forecasts.
o Take a hard look at accounts receivable. o Revisit the company’s performance versus budget.
o Set your fiscal budget and require strict adherence with the only exceptions being authorized in writing by you.
o Implement a hiring freeze and a spending freeze, including raises.
o Increasing productivity within the current staff—using the 80/20 rule, reengineering audits, standardize and simplify, costing meetings etc.
o Do not cut muscle in your staff or budget—cut fat.
o Communicate internally with your team telling them what’s happening and giving them the scorecard. Sell the team on how and why you are doing this.
o Look for opportunities to acquire companies and talent. And realize that other companies are identifying and could be recruiting your top talent.
Suppliers/Vendors: Have you asked your suppliers for help? Set up quarterly reviews with them and ask for their help, as well as their knowledge of the industry regarding acquisitions, talent that’s available, competition information, and of course the newest and most productive ways of doing things.
o Make a plan and adhere to it daily.
o Recognize it’s your responsibility to maintain the financial health of your company and the employees that have been entrusted to you. This is your biggest asset.
o Execute against your plan without exception. If you plan and get proactive, this can be a great opportunity instead of a problem.
Barnett Gershen specializes in helping executives shorten their journey to the next level of success. His consulting services are the result of handson experience from leading an enterprise from its inception through a successful exit. Associated Building Services or ABS—starting with two employees—became the ninth largest privately held maintenance contractor services company in the U.S. with 13,000 employees and sales of $230 million. Please visit www.gershenconsulting.com.