It is chaos out there. The stock market is like a yoyo, banks are struggling and small businesses are feeling the affects. Companies are closing left and right. Unless you are the largest insurance company in the United States and Congress decides to give you eighty-one billion dollars as a bailout you are going to have to be accountable for your own business success.
Economic trends are just that, trends. Good economies move down and down economic trends move up. The big question is always, when? A down economy is like a magnifying lens. It takes any small imperfection in your business and turns it into a major issue. The companies that are run right in good times are usually best positioned to succeed in bad times.
As you lead your business in a down economy, consider these five critical accountability tactics.
Be accountable to cut costs
One of the keys to business success in a down economy is to “get your ship right.” In other words it is critical to get your costs under control. You must know the difference between fixed and variable costs. Lower your fixed costs as low as you can and still offer the service and support you need to offer your clients. By lowering your fixed costs it will be easier each month to “cover your nut” and keep your doors open.
It is also good to lower your variable expenses. This will enable you to create additional profits or be more competitive on new business. Go to your suppliers and see what types of concessions you can get from them. Ask for lower prices or better terms. Maybe you can get an additional discount for cash. Maybe you can get price concessions by combining your purchases with one supplier. Ask for the moon. You just never know what someone will say agree to.
Be accountable to get new business
Your competitors may not be as savvy as you are. Use your lower overhead and lower variable costs to offer better pricing to those customers you’ve always wanted to acquire. Go after your competitors best customers and be aggressive. These potential clients are hurting too and may be responsive to your aggressive offers. This is a great time to pick up clients who may not be getting the best service from their current supplier. Be sure and do your due diligence if you are expected to issue credit to these accounts. Some times companies just change suppliers because they have used up their line of credit at their current source.
Be accountable to conserve cash
Cash is king in a down economy. Don’t spend money for anything you don’t have to. Put off all expansion risks. The goal here is to survive and position your company to flourish when the economy does turn around. If you are in a very good financial position and a great opportunity presents itself then consider it, but always keep your risk at a minimum in a down economy.
Be accountable to secure financing
Many times business owners look for additional financing when they need the money. The problem is that when you need the money many times it is too late to acquire the financing. Set up a line of credit and keep it active. I use a line of credit in my business to help with cash flow. I may go months without tapping into it but I always keep the account active. When you need money you want to have access to it.
Be accountable to maintain key relationships
Maintaining a great relationship with your banker in good times will help when the tough times are here. Having great relationships with your clients will help keep them loyal when you really need them. Paying your bills promptly and nurturing your relationships with your suppliers may put you in a more competitive position either with pricing or service. When I owned a window company there was a glass shortage. It is hard to make a window without glass. We always discounted our bills and had close personal relationships with our suppliers and when glass was hard to get we always had just enough to meet our needs.
Economic issues will affect your business. You cannot control what happens in our economy but you can be accountable for your choices and how you prepare and handle economic downturns. Proactive accountability always is more effective then reactive accountability. Keep your business viable and position it for success in a down economy. Accountability counts!
