It’s pretty clear by now that the economy is going to take a severe beating this quarter, and possibly the entire year. With the strategic picture in mind, how do we steer our businesses through this rocky period? The key to understanding the answers to this are the things that are truly strategic in your business.
When we look at strategic efforts, we ultimately end up with strategic competency and other strategic advantages.
For any strategic advantage to work, it must not be easily copied by someone else. This means that all useful strategic advantages are a result of spending expertise, time and money. I say this because anything that does not require at least one of these things will be quickly copied by any competitor who loses business because you have it. Of the three, expertise is the most replaceable – that is, spend enough time and money and you can have expertise. Money comes in second, because it is also sometimes possible to gain money through the application of expertise and time. Time is irreplaceable – you don’t get more than anyone else, and you cannot create it through any means.
The most strategic elements of your business, then, are those things which require great expertise, time or money to create.
In many cases, strategic advantages require two or three of these. These, more than anything else, should be the engine that creates value for your customers. They also create value for your shareholders, of course, because of the competitive advantages they offer.
Currently for many, no amount of strategic competency will enable you to avoid a decline in sales and profits.
When the whole economy shrinks, most companies shrink right along with it. There are, however, things you can and should do to shrink less than your competitors. More importantly, there are things you can do right now that will enable you to grab more than your current share of the growth when the economy bounces back.
First, you need your business to stay alive.
This means that close attention to cash flow is critical for most of us. It also means that some pruning of expenses may be necessary to stop the bleeding. This is an area that takes care, as some expenses may be critical to your strategic advantages. What you absolutely don’t want to do, for instance, is lose the people whose know-how differentiates you in the marketplace. Likewise, supplier relationships that are critical to your success should be supported – now more than ever.
Secondly, you need to protect your strategic advantages.
If your brand is the key, now is not the time to kick the legs out from under it. Indeed, spending on marketing your brand may be one of the most efficient things you can do during a recession. This is because many companies do cut marketing in times like this, and so the cost of marketing declines, sometimes precipitously. In addition, if you have strategic advantage built on anything that becomes cheaper in a weak economy, you probably want to go into acquisition mode. This means that if, for example, you have a great position in your market because of your real estate holdings or capital equipment, you should consider buying more now. As more conventional, operations-driven companies pull in their horns and buy less, you’re likely to find some bargains.
Thirdly, you need to reconsider your channels, both marketing and distribution.
If your industry is suffering because customers no longer show up in stores, you need to build capabilities in alternative channels FAST. If you use conventions or travel as a means to promote and sell what you sell, you need to find another way to reach the same customers. Many companies will fail because they won’t do this. Others will fail because they don’t do ENOUGH of this. This can happen because you may be hoping that things will return to “normal” faster than they will, or it could happen because you lack the expertise in new channels that you have in your old channels. Since failure to get over this can mean the death of your business, don’t be shy about seeking outside help to move rapidly in a new direction.
Finally, it’s not a bad idea to ask for what you need.
This is true anywhere you might have a need that you can’t figure out how to fill. Your banker, your suppliers, your employees and your customers may have ideas, and they may even have the ability and willingness to come through for you in ways you didn’t expect.
Obviously, this is a time when many companies may want to re-think their strategic plans and initiatives. If you’re in one of those companies, call Robert Bradford (734) 929-8846 or Dana Baldwin (616) 340-4159 to discuss how you can re-evaluate your direction and shift quickly to match the new reality.
If you’d like to use Simplified Strategic Planning to create a plan that will lead to success, consider attending our next Simplified Strategic Planning seminar. Like most people, you’d benefit from having an experienced professional lead you through the strategic planning process. Then you can focus on the content of your strategies. If you’d like to explore how you could do this, please contact me at firstname.lastname@example.org. Center for Simplified Strategic Planning professionals have successfully conducted thousands of strategic planning meetings. Furthermore, they understand how to best use your planning time. Consider holding a one-day workshop on Simplified Strategic Planning in the next few months to improve your results.
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