Are you ready to jump start your business, career and life when the economic restart gun goes? No? As Jacinda keeps saying “Don’t panic, we got this.”
Globally large tracks of the economy have shut down with only essential services running. If you are one of those working or owning essential services, you are more fortunate than a lot. With the exception of supermarkets who said it was like Christmas time, even these business’s have seen a drop off in customer engagement and in sales. The obvious reality is that if you don’t have an online offering, right now you are probably irrelevant.
Here in New Zealand as we push out to back end the second half of our lock down a lot of small businesses and employees are probably holding their breathe that at short notice level 3 will drop in on us and allow some trade. For many of the over 250 000 sole traders and small business’s there in New Zealand, this still has us sitting at home trying hard to figure out how we make ourselves somehow essential and relevant.
Its not all downside, and how you emerge from this forced hibernation will depend on whether you sleep ( Binge on Netflix) or prepare.
History tells us that through significant downturns like this, there are ways we can position ourselves to come out on the other side better off. Companies that seek to position themselves to capture a share of market in a downturn can inevitably reap the reward of the newly expanding market.
There are in reality only so many ways to approach dealing with a closed or shrinking economy. How you deal with it will depend on both your outlook and how you prepared yourself and or your company for this “rainy day”.
Some ways that companies deal with this is very much the same way winning teams approach sport. They deploy defense or offense, or if they are the long reigning champs, a finely honed combination of both.
Defensive moves: Some companies spend both times of opportunity and recession with a prevention focus. In the upside they are focused on what someone else is doing and working to prevent the competition from eroding market share. These are those companies we are often asking ourselves; “How on earth are they still in business?” The answer is often that at sometime they got lucky and grew without knowing really how. They spend little time or money investing in either their talent, their products or their fixed assets. As recession hits and money dries up, they start to cut costs, reduce head counts and rationalize products. The problem with such a mind set is that the remaining people are lead to a siege mentality, they start to aim low and very soon what quality they might have had evaporates and with it customer satisfaction.
Offensive moves: This is often seen in times of recession as being to aggressive. Some companies see this as an opportunity to grow and force changes that will get them closer to the customer. They dig deep into cash pockets that they have been building to acquire talent and assets. While this is in itself is not a bad thing, when the mindset of these “upside” companies is so focused on growth they can too become removed from the severity of the situation that their customers find themselves in. The signs from their customers that all the money has dried up are missed. When an organisation shows that it is lacking in empathy this to triggers customer dissatisfaction. Companies often demonstrate this by investing in R & D and building new gimmicks into products that don’t necessarily offer better value for money. This overly optimistic position can leave them blinded by dwindling revenue streams and a resulting poor financial result and return.
There is a fine balance both a an individual and a company in getting through a recession and coming out the other side ready to take advantage of the opportunities that present themselves. Companies emerging from recession can be described as pragmatic or progressive. The real trick to leading from the front is to deploy optimal combinations of both defense and offense as you make your way through the mess.
As an individual
Cut the costs in your life, those that you cannot cut on your own, negotiate a reduce rate. For those things where you have some fixed costs such as rent or mortgage, its important to know that even those vendors that you pay, need you to pay something rather than nothing. So it is then that it is in their best interest to engage in these conversations.
Develop new opportunities for yourself. Have you got a side hustle going. That side hustle could be tutoring, an art or craft you sell , a second job etc.
Invest in yourself with courses at either university or online, you can keep yourself ahead of the recruiting pack by investing in and valuing yourself.
Build your network. There are just so many ways to do this. If you are not sure, book an hour with me and I will help you explore what is out there for you for free.
As an Company
If you have not paid acute attention to your operational costs yet, this is exactly the right time to work out how you can be more efficient. A prevention or defensive focus is not necessarily about cutting out costs, but rather trying to figure out how you can do things more efficiently. For sure, there will be things that crept into your business during the good times that now look like a waste of time, effort and space, and these should go. Be ruthless about these. But, there will be ways to deliver more with what you already have. It is this kind of value creation that customers appreciate while they ride out the recession as well.
What new business opportunities could arise out this recession for you. There is a brilliant example of this being offered and asked at a Ministry website.
Invest in your company and your assets (the human ones too). Invest enough to stay ahead of your rivals so that when the economy opens up ahead of you, you are that one step ahead. This could mean investing in a piece of equipment or plant as well as investing in training for staff. If you think about it, if you have access to cash funds then you are in a position to negotiate both a better lending rate, and purchasing price for most products and services.
Stay close to your customers. Listen more talk less.
As a end note, if you don’t have a business continuity plan for things like this pandemic ( we are warned another will come) earthquakes or other disasters, its time to get thinking and writing.
We got this!