It seems like everywhere you turn, there is a slowdown in the economy.
You read in the paper or hear on the news about cutbacks in corporate America. Many companies continue to miss their earnings estimates, which makes Wall Street investors quite nervous. I often ask myself, why is it that the larger companies have no problem making changes relatively quickly but smaller companies sometimes wait until it's too late? One thing I realized is that larger companies have to perform for Wall Street each quarter or the stock market will not be very friendly to them.
This forces the leaders of these companies to be accountable to their employees, shareholders, investors and themselves.
The powers-that-be seem to have a strategy to keep the once red hot economy from falling beyond recovery. The Federal Reserve continues to lower interest rates. President Bush continues to talk about his tax-cut proposals.
Wall Street still tries to give us some promise of a rebound. Most of us continue to be hopeful that things will pick up in the near future, but what if they don't?
Each person in a management position owes it to themselves and to their company to prepare for the worst. We are all optimistic the slowdown in the economy is only a short-term setback, but in the meantime, there are several steps you should take to protect your company's success.
1. Manageable break-even. It's important that your budgeted break-even in expenses is less than your average revenue from the previous quarter. If it's not, make changes that will allow you to run the company without falling behind and accumulating losses.
2. Focus. Share information and communicate to your entire staff the condition of your company. People need to understand the goals. They cannot operate in the dark and still be helpful in achieving the company's goals. Everyone must be focused on the goal.
3. Flexibility. In a declining economy, everyone must be flexible. People may be asked to do things they do not normally do. The walls must come down, and people must understand things do not always stay the same. They must be open to change.
4. Value added. During times like this, it's important to differentiate yourself from the pack. When people are making decisions during slow times, offering a small bonus or perk could be just the thing to differentiate yourself. Do something that makes your product more attractive to your customers. Add something they value without having to cut your prices.
5. Be prepared. We've had boom times for so long that many businesses aren't sure how to survive in a slow economy. Pay careful attention to your financial numbers and prepare for worst case scenarios. Could you survive a 20 percent decline in revenue? It might not come to that, but if you're prepared, you're more likely to survive it.
If you built your business on strong principles and sound practices, you have a solid foundation to make it through any tremors in the economy. But what works in boom times may need some serious adjusting in a recession, so be prepared to make the tough decisions and be accountable to your chief stockholder: You.
In the long run, you'll be happy you did. Fred Koury (email@example.com) is president and CEO of SBN Magazine.