Get Lean
With all the financial uncertainty surrounding the global Financial Crisis, it remains unknown whether it will effect Canada, BC or more locally such as Vancouver. Proactive managers take precautionary steps. Reactionary management waits until the crisis and then reacts.
It may not be good news for job seekers. Employee effectiveness is more important in lean times than any other time. Trim unnecessary and marginal staff members. Employers fearing a recession may do a through employee review.
How can you remain employed during a recession? Employees who take an interest in the organization beyond just collecting their pay check there will contribute more in tight times. Those who just look at it as a pay check are never an asset to your company anyway. Recessions are often the time many employers clean house. When more people are unemployed it becomes easier to attract quality employees.
If you are a job seeker, you will be better able to find a job in Vancouver, or wherever you live, if you have multiple skills and show flexibility. Proactive business managers and employers will benefit from cross training employees as it gives you more scheduling flexibility.
At present the job market remains strong in Vancouver and across BC. Across Canada job markets remain strong and the point when I am writing this article, a few businesses in Vancouver, Surrey, and the Lower Mainland have already been effected by what is happening across the border in the US.
Cross training takes time and is often something that does not make sense when the business is very busy. In slower times, cross training can enable you to schedule less people during non-peak hours. Cross trained employees can also cover better for holidays and when other employees are off on sick leave.
If the financial crisis continues, or if we are hit with the predicted recession, employers will first trim the redundant or marginal employees, ask the remaining staff if there are people who wish to job share, or are willing to reduce their hours to 32 hours per week. Do not allow overtime, as it counteracts any attempts to trim costs.
If the downturn in the economy is further impacted by a slow time of year for your company, suggest that people take vacations, or any accumulated paid time off. The challenge is felt by employees. The job uncertainty can result in a reluctance to switch jobs and a willingness to tolerate working conditions that are less than ideal.
Get Fiscally Conscious
As the impact of the global financial crisis hits home, both businesses and individuals are realizing the importance of fiscal responsibility. Although business owners and individuals should be fiscally responsible even in good times, the fact is they are seldom as conscious of margins, costs, and profits as they will need to become if they intend to thrive during a recession. Business managers and owners need to ensure that your costing is accurate. Individuals need to tighten up discretionary spending.
Businesses check for losses due to expired inventory, or perishable goods. Be aware of the length of time it takes for an item in inventory to turn over. If your inventory is non-perishable, it should still be turning over at least once every three months. It your inventory is seasonal, the turnover period should be even shorter. Avoid carrying excess inventory. Businesses that manage their inventory well have less need to cut employees.
Businesses need to tighten up their ordering from suppliers more frequently can save you bank financing costs and free up operating capital. Check your cash flow. Can you increase the deposits you are taking on custom items? Tightening up your receivables is mandatory. When times get tighter, you can end up carrying receivables longer and you may end up with more uncollectible receivables. This could mean sure death, not even survival. Survival is not enough, you want to thrive. That means you need to operate a tight ship.
Individuals need to tighten up their spending and not buy on credit. Check your cash flow and do not buy items you cannot pay for in full immediately. This protects you against having a high credit balance, and high interest fees especially should your job come to an end. It may be a good time to reconsider whether you really need two vehicles.
Replace some of the higher-priced items with lower-priced items, with similar gross margins. People still want and need things, they may just be spending less. That may mean buying an entrée for $14.95 instead of $23.95 and a car for $25,900 instead of $37,900.
Businesses will be forced to become more responsive to the buying public. It may mean they need to be willing to sell products for or services for less. Customers will be looking for places to shop where they can save money. Consumers soon learn where to find companies who recognize we are all feeling the pinch of the financial uncertainty.
Consumers are also more likely to spend more time shopping for a large ticket item. During a recession, good business practices recognize this opportunity to attract new customers, who may have previously been loyal to another business. However, if a business is more responsive to customer needs and have excellent customer service, a recession can be converted into a time for growth.
Re-examine your expenses. Determine if you are spending money that is unnecessary. Find cost effective services. Check your phone bill. It is one of the areas where there is much more competition than there used to be. Not only, could you save by changing providers, you may need to look at the packages that your existing telephone service provides. The plan you have may not be the most cost effective for your needs.
Check out all services and suppliers. Often numerous suppliers can be carrying exactly the same product and charging 20% more. Any business who visits Gift Shows or other wholesale shows, knows all too well that the source of supply makes a difference to the bottom line.
The same goes for consumers. Shop around, and compare prices. Even as people have become more conscious of reading labels on foods to determine what they are really consuming, consumers now will be focussing also on price.
If a business or individual is really suffering, and your landlord is motivated to work to benefit both you and himself you may be able to renegotiate your lease or rent, or renegotiate prior to the end of your existing lease. If the vacancy rate raises, it is of no value for the landlord to keep the rent too high, if it is going to result in a business going under. Although it sounds improbable, it is possible for businesses to renegotiate many contracts if your industry is hit hard and you are in real danger of becoming unprofitable. Similarly it is possible for consumers to renegotiate with lenders to reduce their interest payments. Credit card companies recognize they are better to get something than nothing.
There are two sides to your finances: expenditures and revenues. During a recession a business must remember all the marketing and advertising you could possibly do will not help you if your expenses are out of control.
Businesses must get Customer Service Oriented
Yes, I know you always were, but there isn’t a business anywhere that can’t improve. If you are going to thrive, you must be better than ever before and better than any of your competitors. Create a personal connection with customers. Let them know you want their experience with your company to be the best it can possibly be.
Get to know what individual customers want, they soon become regulars if they feel at home and as if they are family. If necessary write down what they like and don’t like. This goes for small and big ticket items. It doesn’t matter if you are an automotive repair shop, a hair dresser, a restaurant, or a clothing store. People appreciate it if you make suggestions that are compatible with their tastes than if you make a suggestion that is not. Have you ever had a clerk in a clothing store, tell you an item would look wonderful on you as soon as your hand touched the rack. If it is something you really dislike, from that point on you either want the clerk to leave you alone and if they don’t you soon leave the store.
This is the time to provide our employees with customer service training. For that matter training matters more in lean times than any other time. Everyone else may cut training, which only makes your well-trained employees more outstanding in the minds of the customer. Make your company stand out. It will give you the edge you need to attract new customers even during a recesssion.
Think like a jungle animal. Jungle animals know the best time to outsmart their prey is when the prey is sleeping or tired from running. Your competitors may be asleep – doing things the way they always have done them, hoping to get the same results they had in good times. Your competitors may be tired – worn down by the stress of reactive management. This is the time you can outshine them easier than at any other time.
No one is a powerful as the one who maintains an attitude of abundance thinking. If we think lack and recession, we only perpetuate the situation. If your business can send a message of generosity, good times and enjoyment, people will want to share that. They shell out when they see you contributing to the community. Now, is the time to be a part in the solutions in the community.
Get Responsive
People want comfort, security, and familiarity in times of financial uncertainty. Add products they will view as comforting. Give them a sense of security and comfort, either by creating an ambiance that will make them want to patronize your business. Comfort may mean they want to stay home. Can you provide a service or product that is delivered?
Consumers can cut their expenses by doing more cooking at home and by renting a movie, rather than going to the theatre. As consumers become conscious of the need to think twice before they spend, businesses must adapt if they are going to survive during a recession…whether they are in the US, Canada, BC, Vancouver, or any other place in the world. This recession is being felt globally because we have developed a global economy and perhaps is one of the arguments for learning to purchase more local products. If we don’t support our local economy, in the end we suffer more.
Make both your décor and the interpersonal interaction in your business more inviting and welcoming. People love places where people are friendly. If your employees deal with customers on the phone. This may be a good time to do more telephone effectiveness training.
Provide services or products that encourage people to take time out to relax, reflect and rejuvenate. People never stop looking and craving a departure from the real world. Your business may need to be more creative in the way you package your goods and services. People love convenience, comfort and security. If you combine those you have a winning combination.
Get pro-active in your Advertising
Slipstream on events that bring more attention to your company. A couple of examples that relate to the food and beverage industry demonstrate my point. Run events that coincide with historical events, you can bring people to share in festivities. Perhaps a menu from the “Titanic” can bring fans to share in a memory of a historical event.
Seasonal events can bring line-ups. Try something different. A series of wine tasting events, can bring restaurant goers week after week. You can get suppliers to sponsor these events. Have a wine expert at the event. This can also keep the energy level up.
Generate more flexibility in your advertising budget by hosting events that feature more than one business. Join forces with businesses in the area. Participate in cooperative advertising. This is a very effective way of stretching advertising dollars.
Use no budget or low budget advertising that costs very little. For instance a woman who owned a balloon delivery service made a point to park a van at every major event, in a location that it would get on the evening news. Even when she could not get the van on the evening news it was parked in conspicuous places all over the city. Be seen. Brightly painted vehicles with company advertising becomes a mobile bill board.
Go for impact. Advertising should always do this. However now you have more need to make an impact than in good times.
Get Targeted
This is not the first time world events have affected the economy. The hardest hit sector following the events of September 11th, was a the tourism industry. These companies have responded by thinking local. People still will have holidays, some people are more likely to travel locally than take long distance flights. While the impact is not going to last forever, responding quickly is the skill that enables one company to stay lucrative while other businesses suffer.
During times of recession, travel industries recognize that long distance travel may tighten up and they must attract consumers who are travelling closer to home.
It does not matter if you are in the tourism industry or any other industry. The more succinctly you define your target market the less misdirected your efforts will be. Define a niche that is easy to reach. Seek a niche that is not sought out by every competitor. Often this takes some research, but it can pay you back in increased profits and reduced risks.
Get Smart
We do not know how long a recession could last, nor how it will effect us as individuals and as businesses. Take care not to make long-term decisions that are difficult to change. If we are in a recession it may not be the right time to change suppliers or product lines. Diversifying may be necessary, however, ending relationships with suppliers and customers in the short-term may come back to haunt you if the economy turns around – and it will.
Think evolution not revolution. Be responsive to the need to change, but that does not mean that you should over react. Remember that most of the things you need to do in a tight economy, to survive and thrive are really no different than the things you should be doing in good times. In fact, those who run their businesses effectively in good times, feel the difficult times less, because they are more likely to have reserves and a wider margin of profitability.
Having a contingency plan is not just good business sense for businesses. Individuals need to have a contingency plan also. Individuals need to reduce debt and discretionary spending and immediately garner control of all factors within their control. Being proactive always is better than having to be reactive.
The wider your margins of profitability the more you can absorb. If you have not had an contingency plan up to this point, perhaps this is the prime opportunity to develop one. Develop a contingency plan that takes in to account where you are now and where you want to be. Then identify the actions you will need to take to get there.
October 17th, 2008 | Tags: business, businesses, employers, employment, financial crisis, jobs, recession, spending, survival, world financial crisis | Category: Where we Work | Leave a comment