When it comes to the economy, it is not always smooth sailing strategic management. If there are periods of high economic growth, there are also downswings in the economy, where sales decline and consumer confidence is eroded.
This does not always mean bad news, and the choices a business strategist would need to make in these times are not vastly different from those employed as usual. There is a renewed emphasis, though, on having a laser-sharp focus and working even harder. Here are the top strategies to make the business do well in the midst of tough economic times:
Remember the vision
This is always a good chance for the strategic management team to reflect on and reinforce the mission with which the business was started. This vision is the cornerstone on which the business could withstand the tough market conditions. It is good to give a reality check to the vision and refine it if needed, along with renewing the commitment to achieving it.
Manage effort and time better
A business strategist needs to ensure the business spends most of its efforts and time on activities that could lead to growth, which helps in adapting quicker to dynamic market conditions. Senior management should also delegate tasks to suitable, competent people so that their time is freed up for more critical tasks. Of course, it is important to ensure the person has the competence, the right expectations, and the requisite authority to complete the tasks delegated.
Review inventory management practices
A downswing is a good time for a business strategist to look for possibilities of reducing inventory costs without causing inconveniences to customers or reducing the quality of goods or services. Some points to consider here could be:
- Presently ordering too many units of an item, and thus cutting down on the number
- Sourcing from an alternative supplier or location at a better price
- A different and cheaper shipping option
Of course, the idea is to cut costs without sacrificing – in fact, with possibly improving – efficiencies and customer satisfaction.
Improve the marketing channels
Better marketing is a strategy that often works. It is important to differentiate the business from the competition in this way too, as sometimes the differences in products or services are not so much. The strategic management team could advise the marketing team to test different marketing methods and go with the one that generates the largest sales at the lowest costs.
A typical reaction in lean times is to pare the marketing budget to the absolute minimum, or even to eliminate it entirely till the times are better. While this has an immediate cost-saving, it could wipe the brand off the customer mind, which is something the business can ill-afford especially during a downswing. In such times, customers get restless and consider changing their buying decisions, and good marketing can prompt customers to choose the products or services of this business rather than of the competition. Upping the marketing budget, in fact, could also be a solution.
Make the most of current customers
A current customer or client is a ready chance to make some more sales without incurring costs of finding new customers. Loyal customers do not switch their preferences easily, in addition to spreading a good word about the brand and its offerings. Strengthening the sales focus on the existing customer base is a great potential source of profits.
Expand the customer base
To prosper in tough times and look for additional sources of income, the business also must continue to expand its base of customers or clients. Aside from tapping the rare new customer segment, this implies a need to draw in customers from the competition. The way to do this is to offer something more than or different from – but equally or more useful than – what the competition offers. The strategic management team will need to look into the offerings of competitors and determine what would entice their customers to switch over.
Put in place a winning leverage strategy
A key component of business success is to leverage something to the advantage of the business, to build and scale it up. This could be done through:
- Having the right systems and technology in place to build the business
- Keeping the team up to date and well-educated in their field and market
- Streamlining delivery and distribution to allow clients to buy fast and efficiently
- Adequate testing and measuring to know what needs to be stopped and what to be continued to really grow the bottom line
Focus on core competencies
Business strategists often advocate diversification as a tool for success. This, however, has to be with purpose and sound logic. Adding products and services to an existing portfolio just for the sake of impressing customers is ill-advised, especially when such resources could be better used on strengthening what one already does well.
No amount of effort can insulate a business from market dynamics. But choosing the right strategies can often help to stay afloat and even prosper in tough times!