Managing in difficult times

Here are some of the key factors to consider:

Planning

You need to plan on two levels: in the short-term, you must ensure that you have the resources and flexibility to manage short-term fluctuations. Now might not be the best time to expand or to hire additional staff. But in the long-term, you need to focus on being in a position of strength when the economy improves again.

Focus on your existing customers

In difficult times it becomes harder to attract new customers. Therefore it is more important than ever to maintain loyalty among your existing ones. Consider ways of developing and rewarding customer loyalty – selected discounts, regular mailings, loyalty cards and so on.

Beware of cutting prices

If revenues begin to taper off, it can be tempting to cut prices. But this can be a mistake. In a recession your costs will go up right across the board. You may need to raise prices on current items and long-term contracts to cover these costs. Cutting prices can also have the negative long-term effect of cheapening your image in the marketplace.

Concentrate on your key employees

Staff costs are the largest area of expenditure for most businesses, and often the first target for cutbacks when times are hard. But you should always try to keep your key employees: they will help you through an economic downturn, and you will need them again when business picks up. You could consider flexible working arrangements, or contracting out under-used staff. Cross-train employees now, so that if you do have to lose people the remaining staff will be able to cover for them.

Be tough on debt collection

You can soon run into trouble if you let debts mount up, a problem which is all the more likely in lean times. Make sure you have a clear policy for collecting debts, that customers are aware of it, and above all, make sure you enforce it. Pursue outstanding debts by letter and telephone, and threaten legal action if you have to.