Anti-Crisis Tips For Business Owners | by Gil Mahesh | Feb, 2022
There is a saying in business: “Think up a crisis to change something that has not reached the hands.”
And when the crisis really came, you don’t have to invent anything — everything has already been invented by itself. It’s time to pull out the very “long box” in which you put problems for years, and — solve, solve, solve. Until this box became completely heavy and pulled to the bottom.
Make a list of questions that you have long wanted to solve. Need to digitize a company? Should everyone be “put on a number”, define KPIs (key performance indicators) for each employee and strictly control them? Right now! Do you have to constantly push-kick the commercial director? Ask him to do better? Fire him, become a commercial director yourself.
What’s in stock? Have you been planning to start calculating the turnover of goods for a long time? You want to understand why one position has been lying for a month, another for half a year, and in the far corner, there is two or three million worth of illiquid assets accumulated … Put things in order!
Need to change the system of motivation in the team? Transfer accounting, production workers, programmers, lawyers, HR specialists to a piecework-bonus system? Forward! Is it time to tie the front office to a team bonus? Finally, do you want them to understand that they receive a salary not for coming to work every day at 9 am, but leaving at 6 pm, that they are paid for their activities, for the overall result, for the cashier?
There will be no better time for this than now.
The crisis situation is your assistant. Personnel and salary issues are now easier to solve. Employees understand that it will be difficult to find a new job now. That is a crisis, a stable income is a gift from heaven. That you need to hold on to your place, work harder and better. It will be easier to accept changes in the company.
In fact, during a crisis, the CEO or owner carries out two types of transformations in the company:
a) belated “usual” ones, which should have been done yesterday, but something kept getting in the way;
b) urgent anti-crisis measures that will help the company become even stronger.
Act boldly and decisively.
The language of business is numbers. In a crisis, the CEO or owner needs a company control panel. This is the foundation of a business. Gathered in one place, are key figures showing the state of the company. To do this, the entire business must be digitized.
Each employee receives their own personal control panel with personal key performance indicators (KPIs). Everyone clearly knows their goals for the month, week, and even for the day. Personal responsibility has appeared: the parking attendant, the sales director, the financial director, and the chairman of the board stop “working for a job”, and become responsible for the results and, because of this, purposeful.
In a crisis, you need to track everything, there are no more trifles!
However, there is a group of indicators that should be given maximum attention. Analyze and strictly control. These are indicators of the future: they help to understand where the company is heading, what fate awaits it.
Financial indicators of the future:
− revenue dynamics;
− accounts receivable and overdue accounts receivable (DZ and PDZ);
− credit resources.
Market-related indicators for the future:
− number of potential clients;
− investments in advertising (ROMI).
Future indicators related to business processes:
− recommendations (how many clients recommended your company to friends/acquaintances);
− contracting (how many contracts have been signed but not yet fulfilled);
– the number of new products that we are preparing to enter the market now.
Personnel-related future indicators:
− hours of employee training (the more we train, the better the results will be);
− suggestions from employees to improve the business.
In a crisis, all the company’s assets should work. But first, you need to understand what the company has, and for this, conduct an audit of assets. In peacetime, the CEO often does not get his hands on this, which is not the most complicated procedure. We bought something, put a tick in the report, put it in the warehouse. We do not use it, we forgot. Now is the time to remember.
Which companies need to be audited? Only engaged in production? Yes, they need revision. But in a crisis, all businesses need it: both trade and the service sector … Otherwise, one cannot understand how efficiently a business works.
If no one buys or rents an asset, that is, no one needs it at all, it is better to write it off. Even at a loss! Fix in the budget. This will get rid of the trash. And when you build up finances, buy a new, better one and at a great price.
Remember what a wild cheetah looks like? Not a drop of excess fat — solid muscles. That is why he is the fastest land mammal on the planet. Your task is to become like a cheetah, cut off everything unnecessary in the company. Anything that gets in the way of speed.
A powerful warehouse is a competitive advantage in the market. But it also requires a heavy investment. Maintain a large space. “Freeze” money in the product. Pay salaries to warehouse workers, employees of supply departments, production, purchases …
These costs are justified when the market grows. And in a crisis, we urgently need to change, and we start dancing from the stove — from demand. It has become smaller: the purchasing power of customers has collapsed and will continue to fall. The consumer, if he buys, then quite a bit.
Under such conditions, a huge warehouse from an advantage turns into a dangerous threat.
“Dry” the warehouse: analyze and cut warehouse costs by 10–50%. “Drying” of the warehouse goes in two directions, pursues two goals. The first is to quickly get rid of stocks and increase revenue, and the second is to purchase only the most necessary through the tender committee.
First, a big sale. To carry it out, you need to open a list of key customers and decide what discount you are ready to give them.
Move on to other clients from your base. Form an offer, a discount. Call. Calling the customer base helps to increase the repeat sales rate, improve relationships with regular customers. And save on marketing: no need to invest in an advertising campaign, spend money on product promotion.
If all customers have been processed, and there is still something left in the warehouse, go to the market. The goal is the same — to get money, to get rid of the excess. Especially when it comes to non-liquids. Sell without regret. At the purchase price, at a loss — minus 20–30–50% … Give it away, if they don’t take it, write it off and throw it away so that the goods do not take up space so that you no longer spend money on accounting, extra storage or production facilities. To optimize costs.
Remember: whoever has the money is the king of the market.
In the spring of 2020, it became completely clear to the whole world: the Internet will now command the business parade. During the lockdown, people have tasted the delights of online trading. Convenient, often cheaper, delivered directly to the apartment. Many people had two questions: “Why didn’t we do this before?” and “Why to buy now (go to supermarkets, etc.)?” If you have not yet implemented online sales in your business, do it urgently.
Yes, the time has been lost, but the door has not yet been slammed shut — there is a place in the market.
Of course, consider the specifics of your products and services. But in any case, be sure to go online. Do not forget that you will have to do this in adverse conditions. People’s incomes are falling. So think in advance of a network trip to the top of the market so that it does not ruin you.
Ideal option: find a familiar leader of a company that has mastered online sales. Contact him for help. You can pay him or his team — within reason, of course. Let them launch the project: they will set up online sales for you, describe business processes, introduce you to business and technology. Then you are on your own.
But be careful. Do not drive yourself into a network trap. For example, you work in retail, you sell with a markup of 15%. Launch online sales, start selling with a markup of 7%. Thus, you cut the branch on which you sit. Consider your pricing policy. Alternatively, separate different product groups online and offline. Sell part of the assortment only via the Internet, part — only at retail or small wholesale.
NB! THIS ARTICLE HAS BEEN PREVIOUSLY PUBLISHED BY MY ACCOUNT ON VOCAL MEDIA.
