Winning through the Downturn

Yes - the downturn might affect your business dramatically
Yes - that just might be terminal

BUT remember:

“Pessimism is a totally useless philosophy since it probably won't work any way.”

Our job as business leaders is surely to win through a downturn like this and set the strategy and the tactics to do so.

So let's start by examining the problem:

Following the credit crunch finance is tight in the West and the prices of oil, steel and food have all increased dramatically wordwide. We have significant inflation being posted in a number of developing countries and finally we have an increasing number of profits warning from public companies in the West.

So how should we respond to this?

Firstly as far as your business is concerned you should be seeking to harvest cash and be really hard-nosed about any investment. It must generate an adequate and expeditious return. My advice is be super cautious with the banks – they caused a good deal of the problem and I don't think we can assume we can trust them at this time.

Next, now must be the time for you to work hard at improving your business efficiencies - and by that I mean not just your "shop floor" operations but wall-to-wall. To me the best measure of efficiency or productivity is simply added value per employee and you should be seeking to improve that continuously so that you are both lean and mean and fleet of foot.

If you are in an industry where you buy basic materials that are not fashion influenced and is worth helping to protect your margins by considering investing some of your cash in additional stocks at today's prices - that you can subsequently add value to and sell at tomorrow's inflated prices.

Finally in this area I would recommend that each and every time you think about recruiting question whether you could outsource that activity as an alternative.

You need to be tough but fair with your suppliers --negotiate simply everything and share with them your future plans and your confidence going forward. Never pay them late, however, no matter what the accountants might say, it will cost you in the end.

What about your markets?
If you look around there are a many markets for you to target that are thriving and will continue to do well. Obviously the oil rich countries of the Middle East and elsewhere are thriving and the so-called BRIC countries (Brazil, Russia, India and China) continue to do well and are expected to be the leading economies of the world in the foreseeable future. Target them.

Some of the industry sectors that are thriving are all forms of mining - giving a particular boost to the economies of Australia and Canada (Canada is now referred to as the Saudi Arabia of phosphate -- it has one third of the world's supplies) and food production.

The energy industry - from oil and gas extraction through to sustainable, fossil fuels and nuclear power are all set to continue to thrive into the near future. The Aviation industry (but not western airlines) is thriving with record order books at both Boeing and Airbus (over six years of production with only 10% from the US). These companies increasingly outsource globally – target these suppliers like Meggitt in the UK who have just announced record results.

There are more billionaires in the world now than ever before - with large numbers in India, Russia and China as well as the West. Any industry or service sector where they spend their money will continue to thrive - be it super yachts or super hotels or super fashion. Can you sell to them?

Looking at customers generally you need to exploit your strengths mercilessly, you need to be seen to get in the shoes of your customers more, to customise and be creative. You should be moving your mindset from "sell" to "help" and focusing on a getting a "wow” from them each and every time they do business with you.

You need to bring out exceptional new products and you need to focus strongly on giving perceived added value to counter any suggestion that may be coming from customers that you might be inclined to lower prices - don't do it!

I'm sure it does not need saying that you must be very tough indeed on receivables in these times – that hard fought order, that great sale is worth nothing unless you get paid. It's probably prudent to assume a percentage of your customers will go bust in the next 12 months - and you don't want to be left with a big hit.

A word about your team.
Each and every one of your employees (and their partners) are reading and hearing a constant stream of bad news and depressing projections about the future and it is you that they are looking to for a lead. Despite what you might be feeling you need to exhibit a positive attitude at all times, you need to communicate and listen more than ever before and you need to demonstrate that you have the situation under control.
Research has shown that people follow leaders who are decisive, passionate and have fun – and that's what you need to exhibit.

Particularly in these times we need to challenge our paradigms, ramp up our creativity, and look to the big picture.

Otherwise known as:

Helicopters and Boxes!
(Staying in the Helicopter® and Thinking outside the Box)

- why not set up a helicopters & boxes team now?

Finally, for UK readers, I have just read that Goldman Sachs predicts that by 2020 the UK will have the highest the income per person in the world – we will be more prosperous than anybody!

– so all you’ve got to do is to get through ‘till then!

Enjoy!



© 2008 www.rogerharrop.com

Golden Helicopter Award

This one's from Mike Ogilvie:
Following a long day in Manchester at PSA meeting having caught 8.30 plane from Gatwick, Derek Arden and I went to BA and asked to be seated in same row with one seat between us so we could spread out

Despite us having checked in that morning in Gatwick the man at the counter was very obliging at the sight of Derek's BA Silver executive card, and once he had changed our seats he was presented with a WOW card acknowledging his superb service by Derek

I noted his resulting beaming smile and stored this idea for future use - not realising how soon that would be

We went to the Executive lounge to be told by Jemma the receptionist that our plane was delayed by at least one hour until after 10pm, and that as we were the only two in the executive lounge , the lounge was to close at eight

Well "Arden the negotiator" went into action and asked if we could possibly be switched to the Heathrow flight, but Jemma was told by BA that as we had not got open tickets, the only way was if we paid them £69 for new tickets

Well that was far too much for two tired speakers, so we said we could not do that.

Derek was getting frustrated and explained how much he spent with BA each year but, remembering our recent experience, I pulled Derek aside and asked for one of his WOW cards. I said to Jemma that we realised she had done her best for us, but we could not justify spending the extra £69, but please accept this card as our recognition of her efforts on our behalf.

She smiled and we retired to the lounge to eat BA sandwiches and drink BA wine

15 minutes later Derek was called to reception and Jemma presented him with two tickets to Heathrow free of charge. She had appreciated the fact that we had not given her grief, and in fact had recognised her efforts on our behalf, so she called BA herself and persuaded them to switch our flights

WOW - we were smiling now, and when we picked up our cars from Gatwick before 10pm we realised our original flight would not have yet left Manchester

So Jemma Hodgkinson from Aviance Manchester terminal 3 has now been nominated by us for a Golden Helicopter award and we have written to her boss to congratulate him for having such brilliant team members

EVERYONE was a WINNER - so next time speakers, when your ego is threatening to take over, remember it might achieve more to be nice than to be angry.

So a Golden Helicopter Award goes to Jemma Hodgkinson from Aviance Manchester