In 2020, all my clients had a great year. All but one experienced their best year ever in terms of financial growth and profitability.

They did this through lockdowns. Social upheaval. Massive uncertainty.

They prospered. How they did it isn’t a mystery.

Watching Economic Uncertainty Roll By

Next year will be my 20th year of consulting. I’ve consulted through a few seasons of economic uncertainty. Some national and some local.

What I’ve noticed is that in each challenging time, some organizations thrive. Others, in the same industry, don’t. Some companies start and grow. Others, in the same industry, waiver and close.

A small percentage of success comes from quick pivots and adaptations. But most success comes from a few good business strategies that work. Regardless of the state of the economy.

You may be feeling the pinch of inflation right now. You may be feeling uncertain.

The good news is that there is something you can do.

Do three things: Deliver value. Use just enough defense. Mount a smart, assertive offense.

Always deliver value: Ensure that you understand your customers’ value of your product or service. Keep delivering it. If possible, increase it.

One of the biggest mistakes is to relate to customers like they are an inconvenience. They’ll notice.

Just enough defense: By defense, I mean positioning yourself to absorb uncertainty. Here’s an example of good defensive behaviors:

• Build a cash reserve: A good rule of thumb is to start out with at least three months of reserves to cover your operating expenses. As you can, build that up to six months or a year.

My experience has been that leaders with solid cash reserves aren’t as threatened when weird things happen. And leaders who don’t feel threatened make better decisions.

This isn’t just about having the cash on hand. It is also about creating an emotional buffer for better leadership. Cash = Options.

Yes, I know your tax advisor probably won’t like this. And I dislike taxes as much as the next guy. But avoiding taxes isn’t the goal of business.

• Become efficient: Efficiency doesn’t mean cheap. But it does mean making sure that efforts and expenses produce the effect that you want. Reduce or eliminate what doesn’t provide a return on investment.

Most efficiencies are less about cost cutting and more about working smarter. Here are some of the major ways to create efficiency in your company:

• Create clarity: Define roles and responsibilities. Lines and scope of authority. Expectations and priorities. Who is responsible for what by when?
• Get better at conflict: Many studies suggest that managers spend about 20% of their team dealing with conflict. That’s one day a week. Fifty-two days a year. For an eye-opening experience, run the payroll numbers on that. Be sure to include all the employee’s time that may be involved as well. Don’t forget to add any loss of productivity. And opportunities. And customers. I could go on.

Incidentally, a lack of clarity is one of the primary reasons for conflict. Pick up a copy of my book Conflict and Leadership if you haven’t already.

• Change or stop doing what doesn’t produce a return: Companies build habits. Some of those habits no longer make sense. Some never made sense. Stop it.

Some meetings are useless. Some roles don’t provide value. Some decisions aren’t worth the time spent on them.

You don’t have to find everything that isn’t working as it should. But find a few. Most people can think of them right off the top of their heads. Change or stop them.

• Develop useful policies and procedures: Policies and procedures should be helpful and valuable. They should generate a return on investment.

Good policy and procedure make the organization easier to manage. They reduce uncertainty and make problems easier to resolve.

A lack of them means you constantly have to reinvent the wheel. You have to put more effort into managing.

On the other hand, don’t let the tail wag the dog. Policies and procedures exist to serve the organization. Not the other way around.

Don’t feel like you need to write a manual. Just identify the top 3-5 policies or procedures that need to be written, removed, or updated and get to it.

Mount a smart, assertive offense

Keep trying to grow and keep investing. Specifically in three areas:

• Look for opportunities and assets that had depreciated due to the economic climate. In 2020, many restaurants shut down. But some grew. Many that grew moved into recently vacated restaurant spaces. They were able to acquire physical space and geographic market share at a discount.
• Judicious experiments or R&D. Keep trying new things. This could be technological experiments, marketing experiments, internal performance experiments – doesn’t matter. Keep trying out a few smart, careful, new ideas.

• Marketing and business development. Many of your competitors are letting off the gas due to uncertainty. This will eventually create an “air bubble” in their cash flow pipeline. That will hurt them. Don’t make the mistake – people out there still need and want the value you offer. Keep looking for ways to let them know and remind them you are there.

Back to the Basics

You can have a great year. What I’ve described above are just the fundamentals of a healthy business. The fundamentals will always serve you well. And when times are uncertain, don’t try to be fancy. And don’t quit.

Just go back to the basics.

Take good care,

Christian

P.S. If you’d like help navigating an uncertain time, give me a call. I have helped many companies add millions to their bottom line whether times are good or bad.

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Be prepared for a smooth transition in the event of an unplanned emergency succession. My guide will show you step-by-step how to devise your own plan.

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I’m passionate about helping leaders to create workplaces they love going to and increasing the value of the services they offer. My results-oriented approach is tailored to each client’s specific situation and needs.  As a leadership coach, I have developed a wealth of resources to help you and your team grow and become stronger.

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