Still on the recession watch, here’s a list of best management practices for tough times – as compiled by the folks at Toronto-based Newport Partners, an organization that provides both financial and management advice to business owners.
Newport recently gathered together a number of business owners in their network to share war stories and “lessons learned.” Here are some highlights.
1. Cash is king. According to Newport Partners’ Don Lenz, “The companies and the individuals who manage through these periods successfully are the ones who stay close to shore.” Until greater certainty returns to the economy, build your cash position. Look at every expense to find areas you can trim. Stretch out your payables.
As one entrepreneur commented, “It’s not the time to be the best payer. It’s not the time for vision. It’s a time for managing cash.”
2. Communicate to your employees, your customers, your suppliers and your bankers. Says Lenz, “Sunshine is the best disinfectant. It’s better to have people aware of the challenges you’re experiencing and what you’re doing about them than to deliver negative surprises.”
3. Help your customers through their tough times. According to Gus Gougoulias of Gusgo Transport, “Sometimes people drop their pricing because they think that’s what’s expected [in tough times]. But you win more by providing extraordinary service and staying close to your best customers. When they go through tough times, share with them in the best way possible. If they need you to stay open seven days a week, do it - just make sure it works from a cost point of view. When the good times return, your customers will continue their loyalty to your business relationship.”
4. Consider strategic moves that don’t involve capital. Look at mergers, joint ventures or even informal partnerships. Mergers can reduce overhead and sometimes provide strategic opportunities while partnerships can reduce risk and open up new opportunities.
If you want to read the full report, drop me an e-mail at rick (at) rickspence.ca. I will e-mail you the full text of Newport's release (in handy PDF format). It has three more points for running your business better, and seven tips for managing your personal fortune (if any).
My column in the Financial Post this week covers similar ground. To read "Nurturing relationships key in tough times," just click here.