If The Economy Is Slowing, Is Your Business Growing? 12 Tactics To Ensure Your Business Does Well During A Slow Economy
Filed under: Business Growth, Profitable Growth, Top Line Growth, Uncategorized
By now, there’s no question the U.S. economy is mired in an economic slowdown. While your specific industry may actually be strong, slowdowns are epidemic in nature and have a way of leaking into otherwise solid sectors.
The simple fact is that expectations drive consumer behavior. A mindset of limitations is replacing an attitude of abundance. As a result, people are hedging their own bets and risking less.
All of this has put business owners in a precarious situation that they haven’t witnessed during the roaring ’90s. But that doesn’t mean your business has to stop growing just because the masses are taking a wait-and-see attitude.
Here are 12 tactics to help ensure your business doesn’t follow the downward trends.
Warranty and maintenance contracts that extend the useful life of the status quo.
Programs/products and services that promise reduced costs and greater efficiency will be more attractive than those promising increased sales.
Channel power will go to those with paying customers or the ability to retain their margins.
Loyalties and relationships of convenience/laziness will be broken. In times of stress, relationships either deepen or disappear. Pick and choose your partners on both the supplier and the customer side. You can’t be all things to all people.
The transition from having not enough people to having too many people may be sudden. “Bargain-price” human resources can help increase customer service or search for new customers.
The challenge of focusing on your best and highest use, your target market and your customer pain becomes all the more imperative. As demand slows down, every purchasing decision will be questioned. The practice of finding the best suppliers may be replaced by finding the one lowest cost supplier.
As people become more risk-averse to selling on the basis of fear, uncertainty and doubt will be effective.
Capital goods will be harder to get approved by customer finance departments. If so, they will be prioritized in the following order:
- Those that improve profits
- Those that increase sales
- Those that decrease production costs
- Those that decrease administrative costs
Technology factors. When tech capability greater than the market’s capability to absorb it, then price falls when everyone beyond the early adopters stop buying it. The minute the technology isn’t used, the value drops. Technology starts being given away and revenue streams devalued. Inevitably, the technology is adopted and price goes up, or more likely the next great thing replaces it as the cycle repeats itself.
Outsourcing may or may not decrease but the need doesn’t.
Leverage goodwill if you already created it with your customers.
Rethink the time versus money tradeoff. People may have more time to spend on tasks they formerly might have paid others to perform.
While there is no surefire way to avoid a slowdown, if you’re proactive in your approach odds are you’ll be better off then your not-so-prepared competitors.
When Profitable Growth Fizzles
It happens too often.
You launch a new product, service, sales initiative, or marketing program with fanfare and high expectations.
As soon as the kickoff is over, your eyes turn to results. At first, sales trickle in. Then the trickle becomes drizzle. But the downpour never comes.
The program is neither a success nor a failure, but the market response did not meet expectations. These questions remain unanswered:
- Do we have the right product or service?
- Have we positioned it correctly?
- Are we packaging, promoting, and pricing it correctly?
- Do we have the right market?
- Are we selling it correctly?
While your staff will answer these questions with the best of intentions, you are left with the same dilemma: fish or cut bait. Do you reinvest to find out if the initiative can be successful or cut your losses now? Financial analysis only helps so much. Sure, breakeven analysis and return on investment are important tools, but their assumptions will kill you because there is no historical data.
So it comes down to your judgment: “Do I kill the effort or let it ride?” In making further investments, there is another fear. What if, after further effort, the results are still inconclusive?
Here are five steps to evaluate any new product, service, or program initiative:
- Reconfirm the objectives and sales or marketing process of the initiative.
Are they realistic? Many initiatives in business fail because expectations weren’t set, agreed upon, and met. Sales and marketing efforts often fail due to forecasts based on market ignorance or under-funding based on the need to limit risk. If the goal is finding, keeping, or growing customers, clarify this. Or, if the goal is creating more leads, reorders or referrals, make it clear. Otherwise, results are hard to predict or see. - Require the champion and the implementers of the initiative to demonstrate a model for needed success.
Too often, the visionary who developed the idea is not as experienced in implementing it, or vice versa. In fact, it may not even be the same person. Demand a clear model for success. - Establish probabilities of success.
This is where judgment, intuition, and previous experience converge. Bring your team together and agree on the probability of expected results. - Set up a field “test-kitchen” to demonstrate the required success.
Stack the deck in one of the following ways: pick a great sales territory, simple product version, or traditional sales tactic and test your initiative. If it is not successful, let it go. Be ruthless in preventing “scope creep” of the test, and stay committed to seeing it through. - Pick a drop-dead date or event.
At a certain point you must make a decision. Choose a moment in time or define a reaction by the marketplace and let this be the finish line.
Tests like this always force a decision. They should not take longer than two or three months and frankly, in Internet time, can occur much more quickly. The burden of the questionable initiative is that it saps the financial and human resources of an organization, creating dissension and finger pointing. Sometimes it’s better to cancel a promising initiative than to watch it malinger.
And maybe the timing is the problem — it’s just not right for your organization this time.
