Surfing the Economic Tsunami – Focus Your Business
by Richard Barrett
You’re swamped with advice from a wide variety of experts, gurus and pundits on how to survive the downturn in 2009,
- Increase spending on R & D. Now is the time to build your product portfolio for the upturn in 2010.
- Increase your spending on marketing. Now is the time to build your brand.
- Increase your investment in sales. Now you can steal market share from competitors.
- Employees are your greatest asset. Nurture them.
Given that wonderful advice, don’t you feel foolish looking at a 25% revenue decline and corresponding expense reductions. Somehow the economic and business pundits still know best how to spend your money, in spite of their forecasts that just continue to get it wrong.
As the person in charge, you know that you have to reduce spending somewhere, somehow. So the question is not how to spend more money, but how to make spending cuts. One possibility:
Cut spending strategically.
Use Hard Choices to Sharpen Your Focus
In difficult times, where you cut spending may be the most important decision you make. The cuts demonstrate dramatically what you consider to be the most important priorities in your company. So, let’s back up one level. What are your company’s most important assets? If you had to preserve only one, single facet of your organization to restart your business in 2010, what would it be?
What is your company’s single most important asset?
Ultimately your revenues will tell you where you are today. What is the largest source of your current revenue? Is it a single product, a single sales person, a single customer, or even a single technology asset? What can you do to focus your company on that revenue source?
What is the single largest source of your revenues? AKA, what pays the bills?
Politely we can ask, what is the single largest source of your revenues? But in a small organization, you know the real question: What pays the bills? You have to look much deeper than the accounts receivable report. Consider:
Single Customer—If that revenue source is a single customer, then how can you protect and grow that relationship? Does it make sense to relocate your entire company next door to that customer?
Single Product—How can you extend that single product? This is the perfect moment to jettison the R&D project to explore another market. For you, now is the time to steal market share from other competitors. While they may lose focus, you can capture a few key customers.
Single Supplier—Maybe your single largest revenue source is anything from China. Your team speaks Chinese, both Mandarin and Cantonese dialects. When Wal-mart calls, you can find a Chinese manufacturer for anything Wal-mart wants to sell. Then shut down your initiative to build suppliers from other countries. Hire another Chinese speaker. Build on your successes with China.
Single Expertise—For instance, if you can trace your product dominance to a single technology, then your R & D team may truly be the best in that specific technology. In this market you can probably hire a few well-known experts to enhance your team. Cut your expenses elsewhere, say marketing. Build your technology team and send them out with your sales team to win a few key customers.
Single Person—Is your company really a corporate vehicle for a superstar? If so, why not focus on that person? How can you enhance that person’s reputation and value? A superstar often creates some jealousy, but this year just suck it up and build on the strength of the super star. Anyone who cannot support the star needs to find a new opportunity.
In summary, don’t cut vertically. Don’t cut horizontally; Cut whatever does not support your single greatest asset.
Get Off Your Butt
One last suggestion—just in case you haven’t done this already, get out of your office!
You need to be out in front of the parade, not kibitzing in the stands. What is your personal strength? Get out of your comfortable desk chair. Go create some value—in the lab, in a customer’s office, or even in India.
Do what you do best and skip the rest.
You don’t have the luxury to be comfortable as Chief Executive. Get in the game. Rediscover yourself as Chief Inventor, Chief Salesman, Chief Mandarin Speaker, or even Chief Superstar.
And if you’re none of those things then do the one thing you’re sure of doing well.
Get out there and support your people, managers and employees, and move the company in ways that take the best advantage of their strengths.
To your success!
Richard Barrett
