Pre-Met: Key Challenges Navigating Business in Tough Times

Oct 10, 2024

The key factors to staying resilient when global economic drivers indicate swings in uncertainty levels not seen since the 1970s.

As we prepare for Winter 2024, with heavy rain hammering the UK and Europe in unpredicted downpours, we look at challenges, and responses of course, for business during a period post-pandemic, with ‘cost of living’ shockwaves easing but residual and persistent economic limpness. Just how does business respond? A strategic approach, prompt action, and careful monitoring of business metrics can provide assured control in securing long-term survival and growth. Let’s find out more…

Recognising a Period of Economic Stagnation

The first step is to spot the early signs of economic stagnation and make your company resilient enough to weather the storm. By knowing the early indicators, you can take pre-emptive measures before the situation worsens. As management experts McKinsey state,

“Economic downturns are impossible to predict and sure as sunrise. Build resilience now, because when the sun comes up, you’d better be moving.”

Source: McKinsey, May 21, 2019

Monitoring Competitors

“During an economic downturn, companies should keep a close eye on the competition.”

Source: Forbes, Feb 8, 2023

By doing this, you can understand if the economic decline is part of a wider trend in the sector. Monitoring your competitors, particularly their pricing, marketing strategies, and other tactics, helps you identify their response to the downturn. This crucial data helps your business to remain competitive by adapting and adjusting strategy to respond as the changes impact and accelerate.

Being Decisive

Decisiveness is the key to survival during a downturn before the economic crisis worsens. Having the ability to sport the early signs and make swift decisions is vital. Opus, Business Advisory Group recommends that,

"Good management sees the red flags early and takes corrective action before the downturn becomes irreversible”.

Source: Opus, June 5, 2023

Effective and prompt decision-making such as cost-cutting, restructuring, and finding new revenue streams can make your company resilient to the downturn. This will bring stability and pave the way for a sustainable financial future. Do not bury the head in sand and hope things will improve. They just don’t.

Continue Regular Communications with Staff

Effective communication with staff is crucial during a period of economic slowdown. Transparent communication builds up morale and a sense of trust. Human resources should be a key component of this strategy. It helps to keep the workforce motivated and productive. It is important to explain the challenges and the measures being taken to counter as many of them as possible. It is also important to acknowledge sometimes those actions can still fall short.

Honesty and balanced briefing counters rumours and misinformation that could destabilise the workforce morale. Snapcomms, the employee communication software company, advises that,

“Few people thrive when feeling insecure and unsure about their future. Staff work best when there’s a clear picture of the organisation’s direction and the role they can play.”

Source: Snapcomms.com, Aug 2024

What Do Your Dashboard/Scorecards Tell You?

Another important action to take during a period of downturn is to closely monitor the metrics and KPIs of your business. Dashboards and scorecards give an insightful overview of your company’s financial health. They indicate the operational efficiency and market performance of the business.

By regularly reviewing these metrics, you can keep your finger on the pulse and be watchful for anything that needs urgent attention and strategies set in place. Not paying attention to metrics and KPIs can result in financial difficulties for the business and the missing of potential opportunities.

Continue to Do the Basics Well

Operational excellence during an economic downturn helps to keep your company sustainable and resilient. Attending the basics means managing cash flow, keeping suppliers and customers happy, maintaining product quality, and meeting productivity targets. The cumulative effect of doing the basics well is to emerge from an economic crisis competitive and financially healthy.

Final thoughts

Diversification of your products and services can add to your financial resilience when the economy declines. If one stream dries up or a supplier goes under, you still have other revenue streams to keep the business afloat. As Rauva.com explains,

“Diversifying your revenue sources is crucial for safeguarding your business during economic downturns. By relying on multiple streams of income, you can reduce the impact of a decline in one particular market or industry. This strategy allows you to spread your risk and ensure a more stable financial position.”

Source: Rauva.com, Jan 19, 2024

Indeed, economic downturns are challenging, but they are also times for growth and expansion. Invest where clear mover advantage exists through constant vigilance.

Spot the early warning signs, position your company, and employ effective strategies to counter threats. Offer clear communications, decisive action, and maintaining operational excellence will lead to success in the long term.

Sources:

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