Remember before the downturn in 2008? Who was anticipating it? Not many people.
We will experience another downturn. I don’t pretend to know when or why. But economies are cyclical, so what goes up always comes down.
Are you prepared? Here are some points to focus on.
What is essential to the survival of your business in your overhead? I’m not including here what is nice to have as a benefit or something that you have been paying for so long that it seems like a necessary item. What could the company cut from its overhead budget to and still survive?
Make a list now. Prioritize the list: which will be cut in what order, why, and how much will each cut save.
Consider making a cut or two sooner than later. Paying attention to costs when times are good sends a message to your team that you are always working on being ready for the unexpected.
One of the few good things about a downturn is you are provided with a legitimate reason to improve the quality of your workforce by freeing up the futures of those who are not quite the right fit for your company.
Who would you keep on the slimmed-down version of your team? Why? Who are the folks who are part of the solution and are flexible about what they will do?
Figure this out before you need to make the cuts. If and when it comes time to let people go, you will already have figured out who to invite to leave and when.
In the past few years price has not been the obstacle to making a sale that it was early in the Great Recession. What a relief for that to be the case!
When the next downturn happens, be ready for that obstacle to rear its ugly head again.
What can you do now to improve your ability to sell? Are there classes you can take, books to read and/or coaches you can work with? Becoming a better salesperson is the single best thing you can do to survive in a downturn.
At the same time, what is the minimum gross profit percentage you can sell at and have a decent chance at covering the company’s overhead with some net profit being created? Know this. Figure it out with your team. At some point you will likely need to lower your gross profit margin. Anticipating that is better than losing every sale for weeks or months.
All the above are some of the steps you can take to be prepared for a downturn. Suppose you do them and there is no downturn. Consider yourself as having received a reprieve, not having avoided downturns forever.
By doing all this prep when there is nothing in your face forcing you to do it, you will make better decisions than if you were being forced by circumstances to simply survive.