A crisis comes in different ways and often unexpectedly. Five years ago, the SARS-CoV-2 (Corona) virus shut the world down for months in an unprecedented manner. Recessions come around every few years, but they are no less scathing on businesses. But how can we make our business “crisis-proof”?
In business, the customer is king. The first thing to secure in times of crisis is your core customer base. They bring in reliable revenue. Reach out to them to understand their wants and needs and provide outstanding service. This process will help build trust and confidence in your company and product. A reliable customer base can get you through a difficult time.
During tough times, businesses struggle to stay afloat. It is, therefore, essential for business owners to check for any available financial assistance, such as grants and loans, from the government. However, this depends on the sector the business is in, as certain industries have better chances than others.
Make adequate inquiries about what funding your business can qualify for, as it may be the lifeline you need. You can seek professional advice if you’re unsure of what type of funding is right for your business.
In periods of crisis, being able to adapt to the financial realities is paramount. You must be able to rework business strategies to follow the market trends. One must closely monitor customer needs and industry developments to provide the best services.
To survive a crisis, you must learn to evolve and embrace a growth mindset. Stoop to conquer, retreat to advance, and make adequate adjustments to remain relevant in the market.
During the Great Depression, Kellogg’s doubled its advertising budget, a time when companies were trying to lower their overhead costs. In 1932, it launched ads featuring its now-famous slogan, “Snap! Crackle! Pop!” and leaned heavily on radio advertising.
They invested in their workforce by reducing working hours and increasing hourly wages by a whopping 12.5%. These implementations increased worker productivity and captured the interest of consumers.
While this may sound risky, what better time to take that leap of faith that could propel your business than during a crisis? In times of crisis, businesses cannot rely on only one source of revenue. This is the time to break into new markets and fill in that gap in your industry.
Diversification is not limited to changing your products; it also involves expanding into new markets, offering better services, or establishing strategic partnerships.
For example, Amazon launched its services- Amazon Prime, Amazon Kindle, and AWS (Amazon Web Services) —despite the economic recession between 2006 and 2008. By choosing diversification and dynamism, the company became a market leader and even thrived in times of crisis.
It goes without saying that in a crisis, you need to reduce unnecessary costs. While this is not a Hail Mary pass, it is a temporary effort to stop bleeding the company’s coffers. You can negotiate monthly recurring expenses like rent or find cheaper alternatives. Consider delaying payments and speeding up collections of receivables. Take stock of your staffing situation and consider laying off poorly performing employees.
A notable example is LEGO. In 2004, the company recorded its biggest loss in its history. In a bid to save the company, the then CEO and finance director carried out operational cost-reducing efforts, including managing cash flow, reducing the number of components from 7,000 to 3,000, and setting financial targets. The toy company went on to become highly profitable and even thrived in the recession from 2007 to 2011.
During a crisis, employees can become anxious due to the budget cuts and layoffs happening around them. To get the best performance out of the employees you’re retaining, you need to boost morale and build motivation.
Communication is key in these trying times. It is also essential to bring them in and involve them in idea contribution and decision-making. This makes them feel included and like a part of the solution.
Look for ways you can smooth out operational inefficiencies. If there is something you can automate in your day-to-day operations, go for it! Leverage technology to better your operations and give the customer a world-class experience.
In Q1 2022, the sports giant Nike lost three months of production due to factory shutdowns in Vietnam. This caused a ripple effect of inefficiencies and factory congestion, which affected product availability. The company implemented collaborative robots in its distribution centers to speed up the processing of orders. It was successful, and they overcame their challenges.
Effectively navigating times of crisis is an overwhelming but deliberate process. But with the right tools and mindset, it can be a great learning curve for your company to evolve and grow. With these tips from WizeStartup, your company can even thrive in difficult times.