Paul O’Brien — April 9, 2018 — April 9, 2018
When a business is going well, we have a tendency to become complacent and forget what we did to make it successful. Sadly, business has a tendency to work in cycles and if you aren’t careful, your successful business can experience a downturn and quickly become a ghost town.
Suddenly your sales drop, your bottom line is reduced, and you need to start looking at staffing and what you can do to stop a very successful business into a failing business venture. This happened during the GFC to a business which I was running and instead of cutting staffing, we looked outside of the box to look at what we could do and how we could do it better.
The first thing that you need to do is to stop panicking and take into perspective the whole situation so that you have a clearer view of the where you are and what you can change.
Once you can think straight, analyse the books and look at the following and ask yourself these questions:
- What market sectors are your clients in?
- Who are your biggest clients and why? Can you gain more of these types of clients to reduce risk and spread your revenue across more clients?
- What market sectors are your biggest clients in?
- What market sectors are experiencing a downturn, which are stable and which sectors are experiencing growth?
- Can you re-negotiate your expenses?
- Can you restructure your company?
What market sectors are your clients in?
If they are all in the same sector, then your business is very risk adverse and has a good chance of failure if regulations or legislation changes in this sector, or if there is a downturn in this sector.
Try to spread your business across multiple market sectors to reduce risk and improve revenue.
Who are Your Biggest Clients and Why? Can you gain more of these types of clients to reduce risk and spread your revenue across more clients?
1 or 2 big clients makes for a very risky business model, because if you lose them, you may lose your business.
If you have more larger clients, the less chance of a major loses to your business if they leave, renegotiate terms or implement your service or product into their business.
Don’t ever think that your business is irreplaceable. People use outsourced services because it is cheaper then having the service inhouse. If they are paying you too much for your services, a new financial adviser may ask the simple question, won’t it be cheaper to have someone inhouse doing this job and it may be one of your staff members who they head hunt for the role.
What Market Sectors are your Biggest Clients in?
If you understand this question, then you will improve your knowledge of your industry and market, putting your business in a better position to handle downturns.
By understanding what market sectors which your biggest clients are in and why they use you, you may identify potential markets which you didn’t know existed beforehand and may be able to improve or tailor your services/products and marketing to target these markets, increasing revenue and product offering.
What Market Sectors are Experiencing a Downturn, Which are stable and Which Sectors are Experiencing Growth?
If one market sector has a downturn in business, it doesn’t mean that all market sectors are affected by this. By identifying which market sectors are the least affected, if not growing, you have the ability to change your focus to concentrate on more stable or growing market sectors, to help grow your client base and revenue in these sectors.
Can You Re-negotiate Your Expenses?
Just as your clients may ask you to renegotiate your service offering and pricing for your services, you have the ability to do the same as well as a legitimate reason for doing this. This is one of the best ways to improve your profits rather than losing your staffing.
Many companies would much prefer to reduce their pricing, rather than losing you as a client totally, you may also be able to see who else is in the market offering the same or similar services to gain a better price or offering. You never know, your suppliers may have been experiencing a boom in their services and may have allowed their pricing to increase substantially while other businesses are offering a better price and service.
Can You Restructure Your Company?
Rather than lose staffing and experience, by looking at restructuring the company, you may find a better way to run the company under the current economic climate.
You can look at the what the key positions and requirements are for the business and gain a better idea of what the business needs over how it is currently structured. This will allow you to look at how to make the business more efficient and streamlined.
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