Six habits of successful managers in a downturn

As all business owners will be more than aware of the economic situation is currently a challenging one. Those SME owners who steer their companies through the current choppy economic waters will have the following characterisitcs:

Being in control
In the current climate, it's easy to feel at the mercy of forces beyond your control. Winners take ownership of their own destiny. No-one can control the macro-economic climate just now. Nevertheless, you can still control what you do in your business. You can have an inspiring vision and communicate it well; be proud and confident about what makes your business great; make plans and invest wisely, and grasp opportunities others are too timid to spot.

Confidence
These days it's tempting to focus only on today and tomorrow. You and your people also need a compelling vision for the medium to long term future. Communicating a confident vision for the business and yourself in an inspiring way will have a knock-on effect on other people in the business, your customers and suppliers.

Be distinctive
In a recession, some owner managers will scrabble for any business they can get their hands on. As a result, they risk losing sight of their product or service's unique selling point and can end up being treated like a commodity and coming under severe price pressure. Winners clearly articulate the distinctive benefits they bring to their customers.

Winners clearly articulate the distinctive benefits they bring to their customers
Ensure your offering is distinctive and customers are prepared to pay for it. If you are clear about your distinctiveness, you could be better off increasing prices rather than reducing them, even if it means losing customers who don't value you and may be costing you money.

Strength
You need to be absolutely rigorous in managing your business. Focus on the things that really matter, manage cash religiously, challenge costs and waste. Make immediate bottom line improvements by chasing debtors, insisting sales staff adhere to a tight pricing system, negotiating supplier discounts, reducing fixed costs and shedding unprofitable customers. Your plan must be robust enough to survive variances and you need indicators that give you early warning signs of change.

Wisdom
Don't be tempted to stop all investments. It preserves cash in the short term, but restricts the ability to take advantage of the downturn and is de-motivating. Some owner managers will take big risks in an attempt to drive sales. Winners continue to make wise investments for the future.

Differentiate between investments that are crucial to bringing about your vision and those which are discretionary. Before moving into new markets and launching new products, consider whether you have fully exploited existing niches.

Being prepared
For canny businesses, a recession is an opportunity to redefine their sector and their position in it. Understand your sector and keep a keen eye on your competitors. You may gain access to markets, potential customers, premises and people who in better times might not be so readily available. From weaker competitors, you may be able to acquire customers or key staff. You may even be able to acquire some of your competitors. In all cases, be ready to seize opportunities to grasp the upside of the downturn's.

Source: Gerard Burke, Programme Director at Cranfield School of Management

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