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Mar 01
2001

Be Ready for Any Slowdowns

Posted by: Steve Marr

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As the economy roars along, and many businesses enjoy great revenues, a business large or small may become sloppy, or fail to deal with problems because the pressure isn't strong to act. The seeds of future problems may well be planted during a time of great prosperity. Follow six basic rules to maintain success. Effective business owners and business managers observe good management practices during god times as well as periods of downturns. Keep several key rules in place that will help you be effective today, and be prepared for any economic downturns.

 

First, stay focused on your business mission, and don't start to wonder off on tangents. The Apostle Paul wrote, "I run in such a way, as not without aim...". (1 Corinthians 9:26 NAS) One hardware store has expanded inventory by adding a line of rental items. Unfortunately, several businesses already have the rental market well covered. The result is cash is now tided up in unproductive rental inventory that actually competes with possible sales of new equipment. Today, good sales volume and profits are covering the shortfall, but in a downturn the added expense could be a millstone.


Second, hold you staff accountable for performance. Be careful not to allow the current good times keep you from insisting on excellent performance. A travel agency employed a person 18 months ago to sell cruises and develop a clientele. Today, the salesperson is failing to develop business to meet expenses, and has never achieved the planned sales level. The owner continues to tolerate the lack of productivity. In a down turn, the person would likely be let go quickly due to financial necessity. However, if the person were productive now, the business would be able to build retained earnings, and build the required clients that would help sustain the business in the future.


Third, recognize your people are your most important assist. Good people are hard to find, and maintain now. Keep your compensation fair and develop as flexible a benefits program as possible to motivate and retain staff. The strongest workplace performers will be the ones that carry the weight during tougher times. Just prior to the 90's recession a restaurant had extensive staff turnover. With brisk business, the declining level of service still allowed for profitability. However, when the slowdown hit, customers dried up, patronizing other establishments with better food and service turnaround.


Fourth, maintain good communication with your staff, and boss at all times. When business slows, messages must move quickly and effective through any business. Staff needs to understand the pressures and realities faced. If an improvement is needed, mincing words won't help. Be direct. Good communication is difficult to develop overnight, especially when times are difficult. Keep good and reliable information flowing and that flow will help the business in the future. Nehemiah was beginning to rebuild Jerusalem and said, "You see the bad situation we are in..." (Nehemiah 2:14) and related in detail the problem, and the required action. Nehemiah maintained the needed communication channels for stressful times. The people listened, and responded.


Fifth, watch you budget and debt load. The James 4:14 relate, "...you do not know what your life will be like tomorrow...". Business cycles ebb and flow, rise and fall, are good, and not so good. Anytime you plan a budget or debt load based only on optimistic projection and a booming economy, you may be headed for a fall when the economy catches cold. Keep your budget tight, and place excess cash in an asset fund or set aside for future expansion and then use the accumulated cash, not credit to expand.


Finally, know ever aspect of your business well. When revenue slips, and adjustments are needed, rapid proactive action is needed. An owner or manager doesn't have time to catch up on the pertinent detail that will be needed to make wise decisions. The manager of a restaurant laid off a bookkeeper to reduce expenses, unfortunately the manager struggled to close out daily cash, and prepare requited reports. Your instinctive knowledge of all elements of the business is key to managing in tough times and there is no substitute for preparation.


Observe and follow these six steps of good business practice and control for your leadership to shine in the rain as well as during good times. Your leadership will be the difference between success and failure.

Steve Marr, Your Christian Business Coach

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