5 Steps to Survival

Don’t Just Survive - Thrive!

Grand strategies and bold innovations are great. But ­sometimes you don’t need to philosophize – you need to act. Here are five tips from Ed Straw, Vice-President of Strategic Business Solutions at ATB Financial, for weathering the storm

1

Go back to your suppliers and renegotiate

Sure, your suppliers are in the same situation that you are. But your survival is also in their best ­interest. So have a conversation with them about payment terms, and pose it as an opportunity for them to help you through the downturn, with the expectation that they’ll benefit from your eventual success. Your ability to negotiate with your suppliers depends on either how strong you are or, if you’re not quite in the major leagues, how strong of a partnership you have with them.

Yet your business should integrate this practice into its operations even during times of prosperity. Do you have a cost champion whose sole duty is to cut costs? Who routinely ­discusses cost and volume with your supplier? This will work wonders for your bottom line in times of both feast and famine.

2

Redo your processes

Sometimes a slowdown can be cause for reflection. It gives your business a chance to look internally and re-evaluate your operations. In times of unbridled prosperity, lots of logistical and operational inefficiencies can go unchecked in the race to get the job done. There’s little time to pause and ask how you can change your company for the better. Perhaps it’s time to look into added training for your employees or to re-examine your operational setup.

There’s an added bonus to this: it keeps everyone busy and boosts morale.

3

Find new markets

There are two areas to consider when looking for new markets. The first is geographic markets – what would it take to ­expand your business into another city, ­province or even country? Can you put a representative on the ground? What would it take for you to put your same ­products or ­services in another location?

The second is product markets, where you can provide the same kind of service in a new industry. Say you’re an environmental consultant for the oil and gas sector. Are there other industries that will value your services? Evaluate your strengths and look at the industries around you that are still thriving. How could your services fit into them? You know the saying: adapt or die.

4

Find new clients

In a downturn, it’s common to hear business owners talk about how they’ll only take on worthwhile contracts or jobs that pay enough to turn a decent profit. But this is an easy way to ­isolate your business from potential new ­clients, and it can be a fatal error. Take on jobs with lower margins – they can keep your ­workers busy and, at the very least, can cover your overhead.

Everyone around you is facing smaller margins too, and if you don’t want a contract, most people are happy to give it to a company that wants to keep their lights on. No one likes paper-thin margins, but they’re a good way to develop relationships with new clients, and it will pay off when the economy picks up again.

5

Refinancing

Refinancing is all about being able to effectively present and defend your future business plan. What’s your forecast for cash flow? How has your company ­remained profitable through a decline in ­revenue? Have you changed your operations at all? Your business is essentially on trial – make the case for new financing terms. Look years into the future rather than calling your bank to say, “We’re going to be out of money next week.”

Ultimately, the best way to deal with uncertainty is to remove as much of it as possible. Be realistic about what your business can achieve, and predict how that will affect your cash flow. If you can make the case for why a new financing plan will work, then the bank should be happy to help you achieve that.

 

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