For the past several years, most business owners' strategies have focused on growth.
The economy was booming and sales growth was easy -- orders came in almost automatically. The big issue was how to successfully handle all of that growth. But after years of strong expansion, the climate has changed.
Many of our clients who were coming off year after year of record performances saw the bottom drop out of their sales not long after the new year began.
Growth and the successful management of growth are challenges, even in the best of times. We all hope for a quick recovery, but no one really knows what the future holds. When will it start? How fast will the recovery be? Will the economy come back as strong as it was?
Even with the robust economy of the past several years, many industries experienced major changes. Rapid advances in technology have affected the way many industries function and how many companies operate. Business owners who were able to handle these changes and even take advantage of them will likely fair much better as the economy continues its shift.
They will do better because they have learned how to manage and flex as the environment changes. They understand that strategies need to be flexible, not fixed. They have gained an awareness of how the environment is important to success and survival. They recognize why a quick response to changes in the environment is critical. And, they have learned the importance of rapid and decisive decision making.
Leaders of the most nimble and flexible organizations will weather the storm much easier. They will be ready to rapidly move forward as opportunities reappear. Others, however, have spent the last decade lazily wallowing in the automatic growth business climate. They have not developed any real strategies besides answering the phone and taking orders.
These people will likely find the going much rougher because they have a difficult time adapting to new environments. If they have also gotten fat by building up fixed costs, they will have an even tougher time. Many may not survive as things tighten up and sales volumes drop.
As difficult as the coming months may be, companies with strong management and well planned yet flexible strategies can not only survive but get stronger. Management of these businesses will not panic. Instead, it will keep cool, re-examine strategies and take whatever action is warranted to keep the company strong and poised for growth when opportunities are presented.
Managers will also likely follow some, if not all, of these eight strategies, which I will discuss in detail next month.
1. Identify and pay attention to the indicators.
2. React quickly and decisively.
3. Develop strategies but remain flexible .
4. Keep fixed costs low.
5. Don't loose momentum; keep moving forward.
6. Identify new opportunities; be creative.
7. Take advantage of the opportunities presented by the competition's weaknesses.
8. Don't panic.
Joel Strom (firstname.lastname@example.org) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Contact him at (216) 831-2663.