It’s official. A growing number of experts acknowledge we’re in a recession.
Although Wall Street has tried to avoid saying the “R word,” the good news is that the U.S. economy will improve. And smart business owners know that by planting the right seeds during the current downturn, their companies can harvest a bumper crop on the other end of the slowdown. Here are a few time-tested perennials sure to reap big rewards.
Weed Your Garden
This is a good time to focus on your company’s core competencies and eliminate redundancies and underperforming products and divisions. Sell off areas that are not aligned with your core values so that your precious financial and human resources can be used to help drive profitability in the areas that are performing well. For example, Compton Petroleum Corp.’s three-year projection of its operating plans, which revealed a large funding gap, brought industry speculation that Compton would need to sell significant assets, beginning with non-core assets, to solve cash-flow problems, according to a CNN Money report. In another example, a major U.S. bank saved $30 million a year by cleaning up and consolidating duplicate data following a series of acquisitions, according to an IBM report. By reducing redundant processes, consolidating systems and sloughing off areas negatively impacting companies, CEO’s will be in a much better position to take on new business in the future.
Start Large Projects Now
This may sound counterintuitive. But during a recession, the sales cycle will necessarily take longer, so companies can turn this into a plus by using the extra time to focus on quality. Additional testing will help ensure new products have adequate time to mature before entering the market.
For those companies that find themselves cash rich, the recession can be a bargain hunter’s dream. Low interest rates and a bounty of distressed companies looking for infusion of cash provide attractive opportunities; but it’s a good deal only when it adds value to the parent company. In the earlier Compton example, Centennial Energy Partners said publicly that they thought Compton was an “opportunity-rich company” and asked the Compton board of directors to consider selling its company to Centennial.
Hard times provide exceptional opportunities to build customer loyalty. Make sure you begin the process by keeping your employees and investors informed of any changes. This not only has a calming effect but also ensures that the public receives consistent, accurate messages. Customers appreciate it when a business is willing to work with them on pricing and flexible financial arrangements. When the economy improves, they will remember how companies treated them when times were tough. By following these common-sense strategies, businesses can not only survive a recession but actually thrive.