This week we feature an article written for us by Mark A. Stuart of The Stuart Group. Mark is a restructuring and reorganization specialist who I met while working with a Food Processor/ Distributor in Manhattan. Mark had such a solid grasp of working through economic downturns that I invited him submit an article. The article below outlines strategies for the small food distributor who doesn't have a surplus of capital resources and overhead to "cut" to survive and improve during a downturn. I hope you can get some value from Mark's insights.

Optimizing the Downward Economy - Mark A. Stuart

Recently I have read several articles highlighting the winners of past economic downturns. In most of those articles Fortune 100 companies are referenced and complimented for spending and continuing growth efforts during our most recent turbulent economic times. That is a solid news story and certainly worth historic note but the simple reality of today’s business is that the numerical average gross revenue for American businesses today is approximately $2.5 million dollars. Said another way, most companies don’t have the cash reserves, significant head count and base operating costs from which to reduce from and survive as the multi-nationals have. Importantly some estimate that 4 out of 10 companies operating today will be out of business in 12 months.

Therefore our current climate is about bridging the gap between current downward trends and a future period where increased revenue will become more consistent. And simply reducing overhead will not yield the long term results that can come from the current downturn. In fact each business, if it and its leadership want to embrace the opportunity, has the chance to dramatically evolve their business into not only a leaner but critically a better running organization.

Some “Rules for the new economy” to consider:

Don’t let the daily Dow Jones average decide your (or your team’s) daily mood
With the advent of mutual funds, online trading and real time information access stock valuations are not what they used to be. Therefore we shouldn’t fall prey to the emotional roller coaster that begins and ends a trading day.
Don’t become paralyzed by the complexity and enormity of the situation
Most business owners don’t know what to do in this economy. They are embarrassed, frustrated and confused. To drive through the clutter build a cohesive plan of attack, align your organization and act.
In an inning where we don’t know what to do don’t fill the day with off-mission effort that doesn’t deliver results
It is incredible easy to be distracted by the normal politics, chaos and distractions that are in our everyday business – they are the enemy. We do not have the luxury to devote one minute of business focus to non revenue producing or operating cost related efforts.
Challenge legacy issues
Given the fact that time is now a vital resource, utilize it to challenge legacy mindsets that are wrong but may have worked in upward economies. Now is the time to build a better work process and the reward will be seen as the macro market returns to strength.
Restructure (downsize your head count) intelligently
Beyond the painful emotional aspect of cutting headcount the action itself is fairly easy. If you are forced to reduce staff don’t just do so from a cost savings point of view. Rethink the work process and use the time to reinvent how you do what you do. Keep your core competency above all, but rethink how you deliver it to your market. Use the period to reinforce accountability – everyone who is part of the team after a restructure counts and everyone is needed for success. For those businesses with a “rain maker” CEO/Founder don’t fall into the trap of assuming all of the responsibility on your shoulders. There is a reason you have team mates – make sure they are empowered and understand that the success of the company is based on everyone delivering their areas of accountability.
Evaluate other forms of compensation
Human capital is the most precious of all capital forms. During downsizing periods very difficult decisions have to be made. If you have run your organization in a fair way it may be time to challenge your employees to “ask not what the company can do for them but ask what they can do for the company”. If you have stellar performers that you can’t afford, rethink your compensation model and present non-traditional options to key players. Reduced salary, reduced benefits and deferred compensation may be embarrassing to consider but it may be palatable to the individuals that may make the difference.

Mark Stuart, CEO of The Stuart Group is a growth, restructuring and reorganization specialist who has worked with over 100 companies in virtually every business category including entertainment and hospitality. For additional information, Mark can be contacted via email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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