Ben Ridler, managing director of The Results Group business coaching,
tells how business owners can make a recession work for them.
What three core issues should all business owners be addressing?
The recession has changed the game and we're helping clients rethink their game plans. The issues are sustainability, efficiency and opportunity.
To be sustainable, you need to translate your worst-case scenario into cash-flow terms and consider changes needed to make your business secure. You need to be efficient, so consider moving more money from the top line to the bottom line.
It's time to get lean and mean to ensure you can ride out the conditions. The third core issue is hunting out opportunity. Forward planning is good and you need to factor in competitor behaviours.
Are there opportunities presented by a recession, or is the best you can hope for is to just survive?
Many business owners don't realise that in a recessionary environment, there is as much opportunity as ever.
The big things are an increased labour pool from which to draw expert people; a buyers' market, creating potential to increase market share/diversify interests; higher turnover/revenue in the service and advisory sectors; and opportunity to focus on building the business rather than doing it, by concentrating on marketing and promotion.
What strategies are you implementing with clients to protect their businesses?
It's about taking advantage of the environment to reposition as the market frontrunner in your specific business category. Stick to your core business and ensure your model is efficient and there's no fat in your system.
Recession is not the time to try fancy stuff, new stuff or unrelated add-ons. Get better at doing what you do and become the one in your field who's going to come out on top.
How can businesses make the best out of a bad time? How can an owner apply your advice?
A key strategy is to refocus your work. As there will be a shortage of money generally, it may pay, in the short to medium term, to reduce activities that focus on production, revenue and/or turnover, and focus on promotional and networking activities.
These are variable and generally lower cost but in the long term can yield highly profitable results. An example is my experience when I owned a windscreen repair business.
Basically, the business relies on roadworks, the bulk of which are done through daylight saving. The winter wasn't so busy, so some competitors would cruise. I used the time to find new clients.
How do I manage costs when debtors are feeling the pinch as well?
When it comes to cash, money deferred is cash denied. Tighten the cash conversion cycle - the lag between the time a dollar is spent and recouped - to help convert straight revenue to cash flow quickly.
Do this by streamlining invoicing, selling subscriptions, selling ahead and so on. On the web: www.results.co.nz/survey/