How To Manage Through Economic Crisis
Change carries great risk but where there is a risk there’s an opportunity.
There are three principle areas that management must focus on to survive and prosper in the period of change.
- Your valuable formula. Reassess the competitive element that generates profit and sustainable success for the business.
- Modify operations. Change the way the business works to adapt quickly to the changing environment.
- Manage for cash. Establish the absolute priority of cash over profit and investment while the storm is blowing.
These three principal areas are interrelated and ignoring any one of them will be detrimental to the long-term success of the business.
So…let’s talk about those three principles real quick.
The valuable formula?
This basically is what makes the business successful.
The success of the business is dependent on its business model, and good business models are based on a valuable formula.
A business model is defined as the combination of four elements; what, who, why, and how.
- What products or services you sell?
- Who buys them?
- Why they buy them?
- How you make a profit out of the transaction?
Under this principle, you’re going to look at products and services.
For example, the careful management of inventory levels.
A close look at your R&D, and marketing and sales.
You need to take a look at these expenditures to avoid the temptation to just cut back. A number of activities that don’t cost you anything, can add a significant amount to your marketing efforts.
Systems and processes?
Your business should work like a well-oiled machine and this comes down to having the right systems and processes in place.