In my teens I took up boxing, and learned many valuable lessons from it. The most important one, however (and applicable to the beating we are all taking as we look for the economy to turn around), was that you could recover from a knockdown and win a fight, but only if you found the determination and the will to get back up and keep on fighting. In life, as in boxing, you need to look beyond the immediate.
If we don’t keep a positive attitude and an optimistic outlook, it will be the end-of-the-world for us—not because it is inevitable, but because we will have made it so. Optimism is far more powerful than pessimism.
The following strategies are designed to help us all rise from the ashes of this financial crisis. These have been applied successfully in tough times, both in the U.S. and abroad. Apply them diligently with discipline and resolve, and your business will pull through safely. What’s more, they will also prepare you to take advantage of the economic upswing when it comes.
The Phoenix Strategies for Tough Times.
- Don't expect a crisis to go away soon. Get used to the idea that things will be tough, and that you will have to bear down.
- Stop throwing money away. Do everything you can to avoid discounting. Right now, many businesses are discounting without realizing how much profit hey are losing. Did you know that a 10% discount can reduce your profit by as much as 67%?
- Review your pricing frequently. Where are you making money, and where are you not? What product lines and services generate worthwhile gross profits (in dollars, not percentages)? While you are at it, check which salespeople produce the most gross profit, and the same by region.
- Cash flow will be the name of the game. You’ve got to collect your receivables and pay your bills on time. Don’t do business with customers who don’t pay on time, or who ask for so much discount that you don’t make money.
- Know what you don’t need, and don’t buy it. The financial balance of your day-to-day business will be fragile; it won’t take much spending to tip it in the wrong direction. Tighten control of expenses.
- Strategy is all about concentrating your resources on the right opportunities at the right time. Apply your efforts and resources to opportunities that are immediate, realistic and profitable. Stick to priorities. Make your time, effort and money pay off.
- Motivate yourself and your employees. Sell your vision, and share your hopes with them. Ask them for their ideas. Show your love and respect for your employees more than ever—the survival of your business depends on them.
- Create a sense of urgency. This is no time for dawdling, for waiting for things to happen, or for putting off what needs to be done right away. Time is now more valuable than money; invest it wisely.
- Leverage your resources and assets to the maximum. Everything and everyone has to contribute to the bottom line as much and as directly as possible. Encourage everyone to come up with new productivity ideas.
- Renegotiate everything! Suppliers are more willing than ever to get and keep your business. They understand what we are all going through, and are receptive to being more flexible.
- Love and pamper your profitable customers as much as possible. Show customer appreciation every minute of every day. Profitable customer retention is important at all times, but especially so in tough times.
- Get rid of your unprofitable customers regardless of their size. They are dragging you down. They are using up your valuable resources that you could apply more productively elsewhere.
- Innovate! Rethink every aspect of your business from marketing strategies to business model, daily operations and procedures, products and services. Develop new solutions that are of real value to your customers, and be sure to tell them about it!
- Learn the 10-10-10 Rule. It takes 10 weeks to earn a new customer, 10 seconds to lose one and 10 years to get that customer back. Also, it's time to reconnect with your past customers. It’s easier and less expensive than trying to get new ones. The target number for repeat sales is 80%
Surviving tough times takes determination, discipline and teamwork. Each time you survive a storm like the one we are currently facing, you will come out better prepared to be successful in good times when they return. Hang in there, keep your chin up and be confident of your abilities.
Michael Wynne is president of International Management Consulting Associates, and a veteran of marathon races and the ring. He has helped companies and executives grow their businesses in markets around the world. Contact him at [email protected] or visit www.freeprofittips.com.