Five Errors Managers Must Avoid

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However, these important new features of the general economy have also outlined new highways and road maps to help your competition succeed. This forces you and your management team to stay focused and targeted to high performance.

When down economies arise—as they always do—these challenges multiply. This is both exciting and fraught with risk. There is less of most of the good things—customers, sales, profit—and more of things better left alone, like unsold inventory and operating expenses. The challenge is daunting, but, if you survive and prosper, very rewarding.

Succeeding in down economies is a game best played by those that know the rules and have action plans that take those advantages that appear. They may be few, but real. This is true during up or down economies. Down economies further challenge management to become creative, aggressive, and fearless.

Some might question using the phrase "creative, aggressive and fearless" in one sentence describing management in a down economy for its relevance. However, comfortable or not, this attitude is more important than ever during a down economy. Management often reacts too quickly during a crashing economy. Their actions are sometimes mere reactions to the present and coming adversity. Here are some of the most common errors made by managers, all of which should be avoided if possible.

Five Mistakes to Avoid During Down Economies

1. Managers often choose to follow a “bunker mentality” by huddling with management to fight the battle of the down economy. You’ll typically find better, more useful suggestions from your line workers, operating in the corporate trenches. They often have a better “feel” for simple, effective actions that can help companies during down economies.
   
   
2. Adopting a totally reactive personality at the expense of creativity. Acting in haste or corporate panic is natural, but counterproductive. Creativity and "outside-the-box" thinking, which can be effective, suffers as managers spend valuable hours reacting to economic events over which they have no control. Appropriate reactions to these negative results are needed. But increased creativity, not panic, is the engine that drives a positive resolution.
   
   
3. Having “less” but trying to do “more.” The “less” includes sales, income, customers, advertising, employees, and other resources. Simply trying to find ways to get more out of this "less" is usually a waste of time, dollars, and badly needed energy. Attempting to multiply missing resources using smoke and mirrors seldom, if ever generates positive results. Managers are more effective by admitting there is less of everything and finding the highest and best use of the resources that still remain.
   
   
4. Striving for new customers and clients, while neglecting current ones. A common mistake is feeling the need to create a new customer/client base. In most cases, however, this will be a fruitless and expensive search. Historically, your current customers are typically your best source of new sales. This mistake may be the most costly of this top group. Neglecting your current—usually loyal—customers in a frantic search for new targets in a down economy makes little sense.
   
   
5. Dashing around and cutting everywhere in sight. Answer one simple and telling question. When was the last time you heard of a company that dramatically downsized, severely cut spending in all areas, and, consequently, achieved noteworthy success? Think no further. The answer is never! While drastic cuts may be necessary for your company to merely survive the short-term disaster of a recession, you should understand that if success is still the goal, you won’t reach it by cutting people, resources, and operating expenses—and doing little else.

Management makes other errors, but these appear to be the most commonly repeated. Yet, other mistakes can be equally important. For example, those companies that “embrace” a down economy in all its pessimistic overtones, seldom achieve any measure of success during a recession. You will, however, find some companies that grow and prosper by staying positive, finding creative solutions, and operating a lean business, without suffering the agony of defeat.

Avoid the mistakes noted above, stay positive (which also helps your team stay focused), and sharpen your creativity and commitment to excel in down economies. Unless your company has serious other root cause problems—which probably would have been exposed in the future anyway—you can help your company and the rest of management achieve and prosper by focusing on solid business goals.