Improve Profits in a Slow Economy
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Five Ways to Help Your Company Improve Profits in a Slow Economy
Create New Profit Action Plans During Economic Changes
Many companies take one of two common action plans when economies slow down. Unfortunately, both of the most common techniques are usually the wrong choices and seldom generate positive results under volatile economic conditions.
Companies typically adopt strategies that:
- Maintain status quo. “What has worked before will work again.” Or
- “Turtle” and scale back. The “bunker mentality” is alive and well in the corporate world.
Sadly, neither of these common tactics has ever proven effective. Admittedly, there are conditions under which these strategies do no harm, but seldom do they prove to be the immunization or corporate adrenaline that is needed.
The best that can be inferred from adopting either of these strategies: Companies realize the economy is changing, often not in their favor, and they are addressing these volatilities. Implementing one of these devices may sometimes help companies survive economic downturns.
Yet, should you try to find evidence that either of these tactics actually improved profits for companies during these down periods, you will be severely challenged. A corporate bunker mentality or turtle plan (withdrawing into its shell) is not designed to achieve, only to survive.
There are other companies, however, that view economy malaise or recession as opportunities to prosper. Is there risk? Of course, business always involves some risk level. However, motivated, experienced, and talented management understands how to manage risk in good times and bad. Here are some tips to help your company be an active – and successful – player in slow economies.
Five Tips to Improve Profits in Down Economies
- Much like winter pandemics of influenza, passion and enthusiasm are highly contagious. While always valuable, these emotions can become “critical care” in a troubled business environment.
- Whatever it takes, delete survival mode and move to attack mode. Replace an overriding corporate fear response, with an “eye of the tiger” approach. Just as on the athletic field or in conflict conditions, the benefits of retreat (although sometimes prudent) are usually outweighed by the fruits of aggression. Like guerilla marketing theory, action plans (stress on the “action”) during slow economies should emphasize action, not reaction or passivity.
- Erase status quo and create an assertive strategic plan to increase profits. When companies enter survival mode, the creative juices of innovative profit strategies simply dry up. Don’t allow this condition to pervade. Develop strategies that increase, not maintain, profit levels. Striving to be the best during economic slowdowns often achieves results as described in the popular mantra, “Shoot for the moon. Even if you fail, you’ll be among the stars.”
- Value the “bold” more than the “operationally competent.” Whether hiring new staff, evaluating or rewarding current employees, or analyzing ideas and suggestions from team members, you should place a premium on the bold, outside-of-the-box options. While technically or operationally competent employees or procedures seldom inflict harm, in down economies the glory typically goes to the bold and fearless. Are there guarantees? Certainly not. But, the merely competent risk being swallowed by the economic conditions themselves.
- Educate your team members to “think like the CEO.” Even high-performing non-management staff tends to be self-absorbed. Concerned about their individual performance, they often disregard their corporate contribution – or are completely unaware of how their activity affects other business functions. They simply do not know how their actions affect the Balance Sheet, Income Statement, or Cash Flow position. Show them how their specific performance influences overall operations and financial results. This widened outlook on operations will help in hot or slow economies.
While there are no magic silver bullets to improve performance in a down economy, using some or all of these suggestions often prove to help your company’s profits. These tips also help you and your team stand out from their peers, many of whom buy into a status quo or turtle mentality during economic downturns. Your implementation of these tips with your team, whether large or small, may also influence other managers and/or teams to change their thinking to improve their results.
There is also a strong possibility that your proactive efforts will be noticed by senior management. Even a newer manager with a smaller team can have a wide ranging effect on company profits during the down times through creativity and positive actions that are noticed by executive management.