Plan now and avoid the
panic!
In
our previous newsletter, entitled "Panic now and
avoid the rush", we explored the key issues that
must address to prepare from the fallout from the
"Perfect Storm" - global economic downturn
Click here
to read our previous newsletter - "Panic now" or
to watch our webinar called "The Perfect Storm" -
click here to view the Perfect Storm webinar recording
In this issue, I would like to explore the use of
simple scenarios to assist you in addressing some
emerging issues and/or opportunities that may
develop as part of an economic downturn.
I have also recorded a 25 minute webinar, that
outlines the key points of this process -
click here to view
Webinar 2: "Plan now"
The Economic situation and
your business
My experience is that the current volatile economic
conditions will affect different businesses in
different ways, just as some countries (or regions)
are being hit harder than other areas. For example:
Australia seems to be riding the downturn better
than the USA, UK and Europe, but this maybe a
delayed reaction rather than isolation.
You maybe in an industry (or Company) that will
benefit from the government stimulus initiatives or
in an industry that is distanced from the full
impact. For some businesses the economic downturn
will see a lift in revenue.
The trick is for us to determine how your business
may be impacted and also what opportunities may
present themselves over the next year or so.
Where do you fit?
A colleague of mine, Ron Jungawalla, recently
made the observation that there are 3 groups of
people with different perspectives on the economic
climate:
-
The Doom and Gloomers
- these people are of the
opinion that the "end is nigh" and are driven by
fear. The media is fuelling this perspective;
-
The Cruisers
- this group is carrying on as is
nothing has changed - they are in "denial" and
are pretending that if they don't talk about it
- it will all go away;
-
The Future-Makers
- this group is the realists.
They are optimistic but are taking the time to
assess the situation, develop plans for
different scenarios and are actively preparing
to take advantage of opportunities that may
present them selves.
Which group do you see yourself in?
Why?
One of the important things to get right in a
downturn is your attitude.
Another colleague of mine has termed this gloom and
doom focus the "CNN effect", whereby our thoughts
and aspirations are impacted negatively by the spin
that the media places on events.
We discussed this briefly in our previous newsletter
when we talked about managing your personal energy.
If you have a positive frame of mind, you will see
opportunities and advantages in most situations,
often when others are lost in the "doom and gloom".
One way to do this is to develop plans and
strategies to deal with potential downturns and to
position your business to take advantage of
opportunities. Do this while you are in a positive
frame of mind and the solutions are positive and
achievable. Wait until you are in the midst of a
stressful situation and is far more difficult (even
impossible) to focus on great solutions.
Hence the focus on this newsletter is "Plan now and
avoid the panic!"
Using simple scenarios
A great way to develop a realistic overview of your
business and its likely performance in a downturn is
to develop some simple scenarios of what could
happen and then formulate action plans to deal with
these issues, if they arise.
The alternative is carry on blissfully unaware until
the issue reaches a critical level and to then madly
try to develop some solutions and remedies. This is
a high stress activity!
My suggestion is that you follow the simple process
outlined below:
Step 1:
Look
at your business from a number of different
perspectives eg. customers, suppliers,
competitors, etc.
Step 2: Identify
the issues that are acting upon these areas eg.
customers.
Step 3:
Understand what changes may occur eg. to
customer buying patterns
Step 4:
Determine
what the impact on your business will be
Step 5:
Develop Action Plans to address these impacts
Step 6:
Implement your plans, as required.
Click here to explore these issues and methodology
in more detail.
Click here to view our webinar recording - Plan Now.
All you need is a broadband connection and a
computer with speakers.
Customers and your
business
Who are you key customers? How will the downturn
impact on them?
Understanding your customers and possible impacts is
a critical component of developing a plan. Customers
are the reason why most businesses exist.
If the downturn is going to impact you key customers
(positive and/or negative impacts), then we should
be building this into our plans.
Ask yourself some important questions:
-
Who are my "A Class Customers"? Why? (You may
need to do this for "Customers" and "Consumers"
if your business supplies part or all of your
products to wholesalers and/or retailers)
-
What is going to be the likely impacts of an
economic downturn on my best customers?
-
What will be the flow on effects for our
business?
-
What actions will we need to take to address
these impacts?
Click here
watch the webinar to explore the impact of your Customers
in more detail
Suppliers
What inputs are critical to your business? Who are
your key suppliers?
In many businesses, "the suppliers" exert enormous
control and any significant changes can have a
massive impact on that business.
How will the changing economic climate impact on
your suppliers? What will be their response? Will
they adjust payment terms?
What could be the impact on your business? How will
you address these impacts?
It is a good idea to really understand the impact of
key suppliers -
click here
to view the webinar
Competitors
It is entirely possible that some of your
competitors may struggle in a depressed economic
environment. What does this mean for you? How will
they react? How will you react?
Who are your main competitors? What is driving your
industry? What is the basis on which you compete -
price, service, product range, quality, etc?
How will your competitors react to changing
economics?
Click here and explore Competitor Issues in more
detail in our recorded webinar
Products
What is the scope for product substitution? Can your
products or services be replaced (substituted) with
alternative products that are not usually mainstream
competitors? Can your product replace a competitors
product?
Often changing economics change the value
proposition for different products and services.
Products that were previously not even considered as
a viable alternative suddenly become major
competitors.
Take the time to review your products and services.
Look for new opportunities.
For some businesses this is a critical issue that
requires some more thought -
click here for more
information
Resources
What changes can you expect in the resources that
you use to operate your business: staff, capital,
cash, services, access to equipment, buildings, etc?
Periods of economic change cause massive shifts
resource availability and quality. Already in
Australia, my clients are seeing a noticeable change
in the number and quality of prospective employees
from only 6 months ago.
Finance costs are falling but access is becoming
increasingly difficult. make sure you develop a
Finance Strategy with your adviser to take advantage
of lower rates while maintaining access to funds.
What other changes to key resources can you expect?
Review this area by
clicking here
to view the webinar
Opportunities
Periods of economic change provide many great
opportunities. It is easy to get caught up with the
"Gloom and Doom merchants" and to miss out on seeing
the range of opportunities that may present
themselves.
Review each of the areas above and look for
potential opportunities. They will be myriad. Work
out how you can position your self to take advantage
of them now.
Don't forget that a key purpose for completing this
analysis is to look for opportunities -
click here
to view the webinar and potential opportunities
Developing Actions &
Strategies
Once you have analysed your business from a number
of different perspectives, it is time to sort
through potential actions and build contingency
plans to address the issues and opportunities. This
is a far simpler concept than it sounds.
Click here for
the webinar which discusses this aspect in more
detail.
Review
Make sure that you don't approach these issues in
isolation. take the time to discuss them with
colleagues, partners and business advisers to get an
objective view on your options.
Make sure that you invest the time to develop profit
projections and cashflow budgets to look at the
implications on your business. This is a critical
step in the process. MISS THIS STEP AT YOUR PERIL.
(If you are not confident in your ability to map out
the cashflow and profit projections engage your
accountant or adviser to assist).
Click here to
view the webinar and explore this process in more
detail
In Conclusion
The next year or 2 will be a
difficult time for many companies and businesses. It
will also be a time where some Companies will thrive
and where new fortunes will be created.
The good news is that not all
countries, regions and businesses will be impacted
equally and with some planning and forethought, many
businesses will emerge in a stronger position than
which they entered.
Again, this is the time when you should be engaging
professional advice to assist you in your decision
making. Make sure that you involve your advisers to
get some objective feedback (accountants,
consultants, coaches, mentors, financiers, etc.)
If I can be of any assistance in your deliberations
on issues, actions and strategies then please
contact me directly.
<click here to email me>.
With modern communications and transport geographic
location is no longer a limitation getting access to
high quality support services.
I wish you all the best.
Regards
Russell Cummings
12
February 2009
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