Recession is a Way of Life
By Mike Dorris
Every business goes through a downturn, the question is – how will your organization come out at the other end?
The Harvard Business Review crafted a survival guide and suggests an approach with two objectives:
- Stabilize your business to protect it.
- Identify ways to capitalize on the downturn.
The guide describes these items in length, and four tenants stood out for me:
- Be prepared.
- Understand your exposure and quantify the impact on your business.
- Know your competitors.
- Gain an advantage for the long term by investing for the future; taking advantage of opportunistic M&A; and rethinking your business model.
As I have spoken with seedsmen over the past several years, I have come to understand how in-tune you are with the forces that impact your business. Weather, the plethora of new varieties, business consolidation, the internet delivering information, customers who aren’t always loyal, product with a defined shelf life, manufacturers’ requirements, contracts, paperwork, paperwork and paperwork. Being prepared is part of your DNA. But do you have the time to step back, and do the analysis to understand your exposure because of the forces that shape and impact your customers?
Customers are critical to your survival, but when the economy takes a downturn how do you maintain a strong relationship with them, while balancing your need for ample cash flow to run your business? Customers may ask you for special terms, extended credit or discounts. You, while wanting to maintain this business relationship, also have employees and bills to pay. You need to have the information to make the right decision for your business: Can you afford their requests? How do you determine which customer to grant special terms, while saying no to another? Can you run the models to know your risk based on a series of “gut level assumptions”? As a business owner, you are answering to your employees, your board, your financial institution, your community, your family and your customers; there are a lot of questions to be prepared to address.
Along with evaluating your business exposure, you have to access your competitors’. You have built a strong business, in an industry where customer relationships are hard earned. If you give your customers a reason to doubt your sincerity you become vulnerable and someone else will move in to lure your customers and employees away. Do you know which of your competitors is waiting for the opportunity to pick up your business? Or maybe someone is looking for an exit strategy? What about the opportunity to enter into a joint business venture to share cost and risks? Many of us live in small communities where we have long-standing relationships with our neighbors, our customers and our competitors. We want to treat them with respect while protecting our business interests.
Analyzing customer relationships, delving into and understanding the state of your business are critical activities. Using technology to help you maneuver the data and drive the “what if” analysis may provide the picture you need to make the decisions necessary to strengthen your business and protect your family when times are tough.
Join us next week as we talk about the importance of continually investing in technology, even during a downturn. Share your thoughts and comments with us on our social networks using the hashtag #CulturaConnects.