The stock market recently made headlines after the Dow plunged hundreds of points in its worst drop since June of 2016.
The news came with ominous warnings from commentators, which always happens when the stock market takes a bit of a dive.
Every business goes through a downturn, but the question is — how will your organization come out at the other end?
Weather, the plethora of new varieties, business consolidation, the internet delivering information, customers who aren’t always loyal, product with a defined shelf life, manufacturers’ requirements, contracts, paperwork, paperwork and paperwork. Being prepared should be a part of your DNA.
But do you have the time to step back and do the analysis to understand your exposure because of the forces that shape and impact your customers?
The Harvard Business Review crafted a survival guide and suggests an approach with two objectives:
- Stabilize your business to protect it.
- Identify ways to capitalize on the downturn.
The guide describes these items in length, and four tenets stood out for me:
- Be prepared.
- Understand your exposure and quantify the impact on your business.
- Know your competitors.
- Gain an advantage for the long term by investing for the future; taking advantage of opportunistic M&A; and rethinking your business model.
Customers are critical to your survival, but when the economy takes a downturn, how do you maintain a strong relationship with them, while balancing your need for ample cash flow to run your business? Customers may ask you for special terms, extended credit or discounts. You, while wanting to maintain this business relationship, also have employees and bills to pay.
You need to have the information to make the right decision for your business: can you afford their requests? How do you determine which customer to grant special terms, while saying no to another? Can you run the models to know your risk based on a series of “gut level assumptions”?
As a business owner, you are answering to your employees, your board, your financial institution, your community, your family and your customers; there are a lot of questions to be prepared to address.
Using technology to help you manoeuvre the data and drive the “what if” analysis may provide the picture you need to make the decisions necessary to strengthen your business and protect your family when times are tough.