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I thought it would be interesting to now look back over the last year or so of the economic downturn and consider what we can learn from this period for our businesses.
We have been through a very difficult time and some companies have not survived. However, what are you now doing differently as a result of this challenging period or what are you considering changing in your business going forward? I have summarised below some key areas that you may want to do differently or consider in your business.
Be aware of the wider business environment. It is no longer advisable to just focus on your market place and customers, the economic downturn has shown that events in other parts of the economy and even other parts of the world can have a big impact on the performance of your business. It is therefore important to monitor and be aware of what is happening in the wider business environment and the world in general.
Understand your market place. Do you know what is happening in the market place your business operates in? What are the key trends and changes? What are your competitors doing? Understanding the market place your business operates in will enable you to stay ahead of the competition.
Understand what your customers want. What do your customers want? How have their requirements changed? The downturn has shown how quickly customer preferences and needs can change. Asking your customers for feedback, monitoring what they are doing, listening to them and understanding what potential customers are looking for will help your business thrive.
Review and develop your product and service range. There have been many changes as a result of the economic downturn in terms of customer, market and overall trends. Is your range of products and services still right? Do you need to introduce new products and services? Build a regular review of your products and services into your calendar.
Maximise productivity and efficiency. Is your business efficient and effective? Are you maximising productivity? Could you improve your processes and procedures? The recession has highlighted that to make your business resilient to change it needs to be as efficient and effective as possible.
Be adaptable and flexible. The recession has shown us that changes can happen very quickly, in fact even over night. Businesses today need to be adaptable and flexible. How quickly can your company change? How flexible are your processes and procedures? How adaptable are you and your staff?
Know what is happening in all areas of your business. Do you know what is happening throughout your business? What is your current financial position? What are your forward sales? Where are you with that key order? What is bothering your staff? Knowing what is happening in all areas of your business will enable you to react quickly, make better decisions and achieve your business goals.
Take risks in proportion to your business. Taking risks is part of running a business but the recession has highlighted the importance of taking risks in proportion to your business. Maybe you are considering a marketing campaign. Can you absorb the cost of the campaign even if it does not work? Consider each risk carefully and make sure that your business can cope with it not working in the way you expect.
Build good relationships with all your key stakeholders. The foundation of your business is your relationships with your key stakeholders i.e. your staff, customers, suppliers, investors etc. The recession will have highlighted any areas of concern. How are these relationships in your company? Do you need to change any of your key stakeholders as they are no longer appropriate for your business today? What improvements need to be made?
Don't be dependent on one or two large customers. Is your business dependent on one or two key customers? If it is you may be very exposed if one of them decides not to work with you any more. This has happened to companies in the economic downturn with huge consequences. Look to diversify your customer base and not to be reliant on a small number of customers.
Have agreements in place for all your business relationships. During the recession a lot of business relationships were put under pressure due to the difficult circumstances. Where agreements are in place you have some protection if things go wrong. Otherwise it will be very challenging to get things resolved. Review your relationships and look for areas where you need to introduce or improve your agreements. This may be anything from staff contracts to joint venture agreements.
Actively manage your cash flow. During the recession some businesses were exposed due to debts not being paid either on a timely basis or at all. Do you have payment terms in your customer contracts? Do you have a process for collecting your debts on time? Are you actively chasing outstanding payments? Focus on actively managing your cash flow.
Don't over stretch your business. Some companies were caught out in the economic downturn because they had over stretched. They may have been exposed to too much debt because of high borrowings, their cost base may have been too high to cope with a downturn or they may not have had surplus funds to help them get through a difficult period. What is the position of your business? Do you need to change anything? Be careful not to over stretch your business or if it is over stretched look for ways to improve the position.
What lessons have you learnt over the last 18 months and what are you doing or going to do differently? I will be interested to hear your experiences.
Author: Liz Makin
Published: February 2010
Makin It Happen has a range of personal development online courses to purchase, created by Liz Makin, including communication, resilience, time management, stress management and coaching. Liz Makin also provides personalised business coaching, business mentoring and stress management services to business owners, directors, managers and professionals.
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