Issue 345 - Prospering Coming Out of a Recession

Well I had 3 guys answer our informal poll saying they were up 20% or more from prior year. Not a bad showing. The unemployment rate dropped to 8.6% in between Newsletters, and the Europeans are finally waking up to their issues. I thought in the interest of posiitive I would republish a Newsletter written 3 years ago before the MESS, I'm not a clairvoyant, but last week I said the strong will kick butt now.

Well below are some things that if you didn't do 3 years ago you better do them now because I can tell you from my own experience your competitors have. Change is never too late, but change is required. ***

From Issue 149 on Tuesday January 29th, 2008

The Philadelphia Inquirer featured a story on the rising costs of Diesel Fuel, and the predicted recession. We've all seen the effects of these rising operational costs so let's talk about how businesses can prosper in these difficult conditions.

Prospering in Hostile Conditions

Headlines Courtesy of the Philadelphia Inquirer

Recently the Philadelphia Inquirer pointed out some of the mounting evidence of an upcoming recession. Only several inches below this gloomy article was mention of another hard blow dealt to food distributors, the astronomical rise in diesel prices. For most food distributors low demand and high costs are about as hostile as conditions can get.

But you've been through this before, tighten your belt, nose to the grindstone, pinch every penny and you'll get through this again. Right? Sure it'll set you back a bit, might have to let someone go if things get really bad, or sell off one of the trucks, maybe drop a route, stop carrying a couple items, lose a customer or two, but you'll make it up again, just gotta grit your teeth and survive through this...or is there another way?

Consider these statistics from The Kenmarc Company: 70% of companies survive a recession, 25% of businesses fail, and 5% actually thrive in tough times. So how do we become one of the 5% that thrive?

Tips to Prosper in Hostile Economic Times: We've been reviewing a number of recent recession tip lists and here is some of the best advice around.

1) Don't Panic - Excellent advice in any situation, but especially when you consider that a Panic can cause people to act frantic (cutting personnel, dropping routes, restricting credit) or to freeze (wait it out, put off improvements, ignore warning signs). Either of these extremes can damage your company.

2) Increase Communication - Stay in touch more frequently with your vendors and clients during a recession. When other companies may be pulling back their sales and marketing programs increase yours to take advantage of the open air.

3) Work with your Vendors - Establish yourself as a "preferred customer" with your vendors, make extra effort to pay every bill on time. Also consider establishing credit with alternate vendors in case of shortages or loss of a vendor. During recessions many vendors will delay or demand pre-payment from new customers.

4) Evaluate your Customers- work closely with your customers to maintain a win-win business relationship. Review any payment terms/credit limits with your customers now to save the hassle of late payments and arguments later. Review customer profitability to know which customers truly are "preferred".

5) Evaluate your Stock - reduce capital tied up in unnecessary inventory while being sure to maintain adequate safety stock on your key items. Check out our newsletters on What stock to Carry, and Safety Stock for some additional details.

6) Invest Early in Controlling Costs rather than Cutting Costs Late - By pro-actively controlling costs companies can maintain a higher level of performance throughout a recession at the same or lower costs than the competition. Our Thinking Inside the Box introduces a simple example that will be the feature of next weeks Article.

Thinking inside the box:

I'd like to close our article today with some thoughts from The Kenmarc Company:

***"Another key element for thriving in a recession is to focus more on customer satisfaction. By focusing on delivering more than you promise, you are putting the customer first. This helps reinforce their decision to buy from you. Whether the economy strengthens, continues to slide, or stagnates, the only certainty is that change is inevitable to succeed in today’s businesses environment.

When it comes to dealing with change, small firms are at a distinct advantage. Not having the large corporate hierarchy, they can be flexible, react quickly, and readily respond. When you make a change in a big company, it's like turning an aircraft carrier. In a small company, you're turning a jet ski."

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Issue 345 - Prospering Coming Out of a Recession

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