Archive for October, 2008

An economic slowdown is scary for everybody.  Daily newspaper articles and television features reinforce the general fears about how bad things are going to be.  Your company might be unaffected, but probably will slow down at least a bit.  Avoid the temptation to wait passively for the inevitable upturn.  Take the opportunity to make your company more agile, responsive, and efficient.  When things pick up again, you can get back to speed faster than your competitors and operate at a higher capacity than before.

The sequence might go this way:  adjust your attitude, analyze your business plan and operations as coolly and objectively as you possibly can, and then invest in technology which can lower expenses in the near term and build the long term value of your company.

Adjust your attitude

You have to want to succeed.  As Woody Allen says, “Eighty percent of success is showing up.”  Abraham Lincoln said the same thing in a different way, “Always bear in mind that your own resolution to succeed is more important than any one thing.”  Do you have the stamina to keep showing up?

If you want to stay in the game, you should decide to compete on quality, not on cost.  If you compete on cost, you’re stuck in a race to the bottom.  Peoples’ needs don’t go away just because the economic conditions are poor.  Identify what you provide that people still need, and be sure that this service or product is top notch.  Prospective clients will be more likely to risk spending their scarce funds to buy from you if they have confidence that their needs will be fulfilled on schedule and bug-free.

Resist the temptation to feel helpless.  You always have options.  Find them.

Sharpen the skills of your workforce so you can compete on quality

Competing on quality means maintaining a highly skilled workforce. Be sure your balance of younger and more experienced workers is effective.  The energy, drive, and malleability of entry level workers provide a good engine, but you need experienced, steady hands at the helm.

A number of studies specific to software development on the subject of cost vs. skill have concluded that value increases at a far greater rate than cost as worker skill increases. A worker with twice as much skill produces far more than twice the value in the form of productivity and lower defect rate.

This is a good time to provide mentoring and tutelage for your less experienced staff.  The faster and better each of them works, the better the company is.

Automate where possible

Business process automation has the benefits of greater speed and consistency. It also allows a business to gather information that wouldn’t be collected at all if it were done manually.

Automation tools add immediately to your company’s permanent infrastructure, and will provide new abilities which can then be offered to your clients.  The ideal use for automation would be providing these new abilities, rather than cutting your staff, though staff cuts may sometimes be necessary and advisable. Weak staff members, or areas of inefficiency in the company cannot be dealt with any other way when you don’t have the financial reserves to nurse them along.

Processes that require a minimum of special handling are most amenable to automation. Take some time while business is slow to determine which business processes are most-cookie cutter and look for a service provider to help you find ways to automate those processes.

Outsource where possible

Automation is generally preferable to outsourcing as a cost-cutting method, because you have more direct control in its creation and implementation.  It might be, however, that accounting functions, customer service, data entry, and printing could be outsourced.  Your particular company may be able to cut costs through outsourcing in ways you haven’t previously thought of – maybe that nobody has ever thought of.

Since outsourcing almost certainly involves the displacement of staff, and may undermine morale, it might best be left until last.

Make your decisions on the facts

Base your decisions on a clear-eyed understanding of how your company functions financially.  Good reporting systems will find the hidden and non-essential costs that you can strip out when cash is in short supply. Perhaps you will find savings which will save one valued staff member, or one initiative under way.

Invest in tools which will give you the information necessary to identify the strongest segments of your business.  When you gather the cold facts, there may be some surprises.  With the tools in place, continual re-assessment will be possible when you’re once again working overtime.

Identify what makes your company unique.  What can you lean on to pull you through the tough economy?

With the facts in hand, you are in a position to prioritize, allowing you to cut costs in the way which will be least harmful to your company’s mission.

Move Forward

You have a limited amount of time to get the most out of this effort.  Act while your competitors are still slowing down.  The longer you wait, the less leverage you will have when the weight lifts.

Focus on your own company and your own clients.  You don’t have to solve the underlying problems of the world economy in order to pull your own company out of an economic slump. For the moment, find a way for your profits to go up a little faster than the economy is slowing down.

You don’t have to think alone.  Unlocking the minds of your staff calls for leadership.  Inspire your staff to join you in resisting paralysis and moving forward.  (You might find the time to read a book written by one of those management consultants you can’t afford to hire.)  How best to light a fire under your staff?  More staff meetings?  Written reports?  A retreat?  Video presentations?  Something you never thought of?

Your new automation and reporting tools provide insight and, most importantly, infrastructure to catalyze new ideas that push an organization toward new streams of profit, even during a downturn.

Finally

Nobody knows your business better than you do.  Nobody cares more about the company’s future viability than your staff.  If you have the facts behind you, and a clear vision in front of you, you can make the investments and make the changes to get through this gloomy time stronger than before.  This is what being in business is all about — pulling through and staying in business.