Most experienced entrepreneurs and management teams have lived through both good times and bad and have the scars to prove it. Perhaps this rings most true for established businesses in cyclical industries like agriculture. Many would also likely agree that managing through the good times are a lot more fun and a lot less stressful, but also create a much different set of challenges than when managing through the tough times.
During the tough times, things really get down to basics…watching and/or reducing expenses, freezing hires, deferring non-essential capital expenditures and perhaps even shutting down non-core parts of your business or selling off/discontinuing unprofitable product lines etc. Presuming any downturn is temporary in nature, the tough times, can also create special opportunities as well; such as buying out a competitor or securing a “Rock-star” employee or manager that has been laid off or downsized. A business’s ability to survive a down-cycle really boils down to two items: management and your capital structure – a well-financed business with a strong management team will survive and potentially come out of the downturn “leaner and meaner” and hopefully in a better position to withstand the next downturn. Performing well during tough conditions should be the ultimate goal for management and is a measure of a truly solid business. During good times, there are lots of businesses that are poorly managed that do very well. Competitors often seem to make stupid decisions on pricing to capture market share or recruit your best talent with “out of this world” salaries or incentives. Customer objections are often easy to handle and still make money. Even the poor performing sales people seem to hit their targets each month. So the key to management during these times is to ensure that you don’t get complacent or sloppy. It is also critical to build resilience into your balance sheet to withstand the inevitable turn for the worse that is down the road. And finally, it is the time to invest heavily into the initiatives that will make the business better over the long term. So regardless where you are in the cycle…regardless if the times are good or bad, entrepreneurs and management teams need to be keenly focused on continually improving performance across all functional aspects of the business, including Executive Leadership, Financial Planning and Control, Business Processes and Quality, Human Resources, Product/Service Innovation, Marketing, Sales, Business Planning and Exit Planning. Our Business Performance Tune-Up process for small and medium sized businesses, focuses on improving management practices that increase enterprise value, drive profit, accelerate growth and lower operational and financial risk, regardless of where you are in your current cycle. Learn more at www.ba-managementconsulting.com
1 Comment
6/7/2017 04:31:50 pm
Be sure to take a break once and a while with your business or you;ll get mad!
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