Below you will find the link to the final blog of our Business Basics Series. Certainly a degree of optimism has crept into business thinking of late. In conversation with Clem Piscitelli, Principal Advisor of PWK Private Wealth recently, he sounded a note of caution; ‘Practically we won’t know until the end of the October-March period what the impacts of the COVID-19 lockdown have been on businesses and business earnings.’ He went on to point out that following the Tech Wreck and GFC, it took three to four years for earnings to claw back to their previous levels. This observation suggests that the thoughts that Paul Tyquin and I have provided in the past six weeks are not to be ignored over the next nine months at least.
We trust you have found these tips useful; not just interesting.
- Think optimistically, lead confidently – Recognise the brutal facts of the current reality but never lose faith that you will prevail in the end. In a changing economy, having the right attitude is more important than having the right answers. Surround yourself with positive people, but it can help to emphasise to colleagues the consequences of failure.
- Avoid ‘business as usual’ thinking – It is easy for complacency to creep back into an organisation. Use this time as a mandate to ‘sort out’ your organisation. Make the painful decisions that have been put off until now. Create a sense of urgency around the changes needed.
- Focus on the fundamentals – Revert to the basics, realign the focus of your organisation, recognise the importance of customer relationships and reshape your product and service offerings as required. The documentary, ‘The Last Dance’, about Michael Jordan has been very popular lately. One of his quotes is particularly relevant: ‘The minute you get away from the fundamentals – whether it’s proper technique, work ethic or mental preparation – the bottom can fall out of your game, your schoolwork, your job, whatever you are doing.’
- Simplify – During the pandemic policies were short-circuited, decisions were streamlined, processes sped up. Remove the bureaucracy and deadwood that has crept into your organisation. Rationalise your products and services. Free up management time from the meaningless ‘stuff.’ Apply the 80/20 rule.
- Seize opportunities – Never let a good crisis go to waste. Don’t just see opportunities, seize opportunities. Identify price insensitive sectors and segments, adapt current offerings to other uses, diversify where it makes sense. Consider acquiring undervalued assets and underperforming companies. Evaluate these opportunities carefully; have a plan; act decisively.
- Cut costs strategically – Distinguish between the essential and the expendable. Avoid ‘across the board’ cuts. Equality of sacrifice just means equality of misery and misses the opportunity to remove fat from overweight parts of the organisation. Use a scalpel, not a bacon slicer, to cut costs.
- Avoid becoming your customers’ banker – Control debtor risk. Monitor debtors carefully and hold fast to your policy on cash collection. But in implementing your policies on debtors, take care not to damage current relationships with customers.
- Increase costs to decrease costs – You may in fact be justified increasing costs in some areas to decrease total costs. Maintain your ‘people’ focus. For most businesses, people are the highest cost but must be seen as the most valuable asset . For example, it makes sense to increase salaries to attract the right people, to increase productivity and to improve profitability.
- Differentiate – When demand has slowed, as we expect it will around October, competition will become intense. Apply the following philosophy to all that you do: ‘You have to be better; if you can’t be better you have to be different, because if you can’t be different you can only be cheaper.’
- You must adjust and adapt to advance. – No battle plan ever survived contact with the enemy. Responsiveness, flexibility and simplicity will be the hallmarks of future success. Review your current strategic plan – re-evaluate your focus, establish clear direction and above all concentrate on results.