If you have been running a business from before the GFC, you have hopefully recovered over the last couple of years as the global economy, while still cautious, has been picking up. For many, times are starting to look difficult again as the possibility of a double-dip looms.
The difficulty in this scenario is that like many others, you had probably implemented many disciplines at the GFC downturn which stood you in good stead, but since, have allowed some of these disciplines to slacken as business became easier in the last few years.
Once the pressure is off, it is easy to slip back into the old ways and gradually allow costs to rise once again. Making disciplines implemented during a difficult period into institutionalised procedures is not as easy as it seems when day to day survival is not such a big worry.
When the economy is good and sales are growing, it is easy to allow discretionary spending into initiatives like “change management”, but when the mood is in withdrawal, you instigate disciplines quickly. Without the proper processes of change management, some of these changes just don’t “stick” and as soon as the belt is loosened, old habits come back.
It is in this atmosphere that the business owner or leaders need to lead by example. People have to be shown what is the right thing to do, and why, and leaders need to make sure that their behaviour is sending the right message to their teams.
Business leaders need to make clear that the procedures imposed during difficult times were not carelessly thought out, and that the procedures were more about discipline and removal of fat and clutter than merely cost-cutting. The running of an efficient business is a benefit in any situation, not just when times are tough. It must be made clear that the procedures brought in at that time continue to be part of the business systems and culture in order to build a more efficient and better business over the long term.
If anyone questions this, you can easily point out any number of examples of companies that have allowed the slack to come back – over ambitious budgets and targets, matched by increasing overheads to support the targets have, in many cases resulted in disaster because the inherent risks have been ignored in the optimism.
Your ability to show that you can stick the course as a business, that shows good conservative financial management while pursuing value for the customer, will attract more business because people are attracted by solid companies to do business with.
There is one area where your business may look at spending more – but hopefully carefully weighed so that there is a requisite return on investment. This is the area of rewards and incentives for key staff. You will need to know what effect different incentives have on different people. You will need to identify the behaviours, and resulting outcomes of those behaviours (attract more loyal customers, higher sales, etc.). You will need to align rewards with behaviours that bring solid returns (or savings) to the business.
As the business leader in these uneasy times, go over this checklist to see if you are setting your business up for success:-
- As the leader, are you setting the right tone of discipline?
- Do you monitor expenditure and explain any upward creep?
- Are streamlined policies and procedures in place and monitored?
- Are the policies and procedures designed for tough as well as good times?
- What steps are in place to discipline or reward people for non-compliance/compliance?
Once you have gone through the checklist go to https://teikoh.com and look at our resources where there are many tools and templates to ensure new procedures are institutionalised. While you are there enter your name and email to the subscriber list and we’ll make sure that these free tips, tools and resources are delivered directly to you.