There is no doubt that we are in a downturn. The US is in recession and while Australia is not as badly affected, conditions are not as good as they were 6 months ago and certainly not as good as they were a year ago.
But that doesn’t mean you just batten down the hatches and wait for it to pass. Some of the best businesses came out of recessions and downturns, think Google, Facebook, Amazon and PayPal.
Being intelligent with prudent financial management using first principles can put you in the driver’s seat to prepare for growth and come out of the downturn like a rocket ship.
One. Re-asses your cost base and make sure you are right-sized
Finance and budgeting is probably the most boring part of business, but also the most important. Prudent financial management is essential as is managing risk, especially in more uncertain times. For SMEs, speak to your accountant or financial controller about running a review of all expenses. You should be running a review and vendor comparison on all your major expenses at least annually, but in times like this, go further and start with first principles.
Don’t just look at what you spend vs the cost of alternative suppliers, take it one step further. A good way to approach this is to start with a blank piece of paper. What would you do if you were building the business from scratch today? How big would your team be? what roles would they have? how big and in what location are the offices? what systems would you use?
Make no mistake, we just came out of one of the biggest booms in history and expenses and teams get bloated chasing growth. This is the time to rethink your cost base and structure, reward your best people and make sure you are as efficient as possible. Not only to withstand the bear market but also to be ready to grow when the winds change.
As the great man, Manos Findikakis says, ‘volume is vanity and profit is sanity’
Two. Run a full review and go back to basics
After you assess your finances start looking at your unit economics and business fundamentals.
Which cohort of clients is most profitable and which products/services bring in the most revenue?
Assess your team, what are you good at and what are they good at? Remove friction wherever possible.
Revisit your purpose, vision and values statements and make sure every major decision you make considers them.
Run a regular NPS to find out how your clients really feel about your product or service and use the findings to receive testimonials and reviews from the promotors and invaluable feedback from the detractors.
Three: Systemise and automate
If you are still doing things manually, now is the time to review your processes and systems and where possible automate them.
Make sure you have the correct system in place as your source of truth. But using the right system is not enough. Setting them up correctly and implementing training programs for your teams to get the most out of them is essential.If your CRM is not working for you, chances are it’s not the fault of the system. More likely, it is that your team has not set it up properly or been trained sufficiently on how to use it.
We use Hubspot at Levels and Synx is our preferred supplier for the setup and management of the system.
Insist on maximum usage across your team. If the data isn’t in the system, you can’t identify the gaps in your efficiency or productivity or what is working best. Especially in sales and marketing.
Now once you have your system set up properly, your team is trained and you have ironed out the bugs, it’s time to automate as much of the process as possible. Most CRMs can be automated to actually ‘do the task’ not just set a reminder for you to do it. By automating mundane, repeatable tasks, you free up time to better serve your clients.
Four. Seek advice and drop the ego
The best athletes and business professionals in the world have coaches. Serena Williams is the greatest tennis player of all time and she has a coach, as did Eric Shmidt, ex-CEO of Google and many other business leaders. In larger companies, this may be a CEO to Chairman relationship which is not available in smaller businesses.
If you don’t have a coach or don’t want to engage one, build an advisory board. Running a small business can be lonely, and no matter how smart you are, there are people better than you at certain parts of your business.
Maybe you are a great broker, estate agent or technologist, but that doesn’t mean you know how to get the best out of a high-performing team or build repeatable processes, etc.
Engage people that see things from a different perspective. Often, by looking at things with a helicopter view, from the outside in, they will be able to see things you may have missed. We practice what we preach too, this very blog is the result of something identified by my advisory board, that in hindsight was glaringly obvious.
Five. Prepare for scale
After every downturn comes a boom and if you have followed the steps preceding this, you will now have an efficient, automated, and agile business, ready to take advantage of the rising market.
Others that didn’t put in this work, and either felt sorry for themselves or just pushed through the downturn without adapting, will be in a far worse position and in survival mode, rather than thriving.I can assure you, very few of your competitors will be as well prepared and you will rise from this downturn like a rocket ship rather than simply limping for survival.
Levels has new openings for our Executive Coaching Program which provides an affordable service for SMEs to follow the steps in this blog in a systemized manner and come out the other side a stronger more robust business.
The service includes weekly stand-ups, monthly strategy and planning sessions, templates, documents, and access to our experienced coaches and advisory board.
Email us to organize a free consultation to see if it’s a good fit for your business and mention this blog for a 20% discount on your first 6 months.