Editor’s note: This article was first published in January 2011, during Spain’s economic crisis; the crisis it describes spreading among competitors and neighbouring businesses is the situation of that time.
A business can die if we fail to treat the first symptoms of the illness. Clearly, the obvious symptom of a sick business is a loss of profitability, but by the time you notice profitability falling, the virus has already got in, and the treatment (the measures you need to take) has to be more complex and elaborate. You know the saying: “prevention is better than cure”.
There is no better way to eradicate a problem than to avoid it, what we might call a “vaccine” for your business. Below we explain how to detect the symptoms of “illness” in your business and how to deal with them.
There is a virus prowling around your business called “crisis”, and some of your competitors and neighbouring businesses have already caught it, so if you stay “static” it won’t be long before it reaches you. The symptoms of a sick business are:
1. When your prices don’t add up
If one customer tells you that your product or service is more expensive than at “Joe’s”, take note. If two customers tell you your product is more expensive than at “Joe’s”, take action. Find out what price “Joe” sells at and, if his price is indeed lower, try to find out who his supplier is.
It may be that “Joe” has decided to cut his profit margin, or simply that he buys more cheaply. In that case, renegotiate with your supplier so you can compete with “Joe” and, as a last resort, if you can’t negotiate, look for a new supplier.
2. When you are no longer interested in your old customers
I have known companies that started out in a small workshop and begged their acquaintances and friends to buy from them. Over time, the company grew and opened new departments, won new and bigger customers, and there came a point when they were no longer interested in serving their old customers, because their orders were smaller.
On the face of it, this is a good thing, and it even seems normal when a company is successful, but let me tell you that when you forget the people who helped you grow, you start to lose “quality” as a person, as a businessperson and as a company.
Some of these companies that grew to the point of forgetting their old, small customers had to turn to those small customers again when the crisis arrived and caused the bigger companies to close, because the small ones stayed open despite the crisis.
That is why the most basic sign of the failure to come is sometimes preceded by a period of success in which you think you are God, but end up forgetting the apostles, only to discover in the end that you are just a man who sinned through a lack of humility.
When you find yourself in this situation (and I hope you do), create two production lines and two types of customer, but never take the food away from those who fed you when you started.
3. When your customers slow down their purchases
This can only be down to two reasons:
- Your customer is now splitting orders among several suppliers: If this is the case, you need to find out why. Ask them without fear how you can improve so they are happier with you, or what the others are offering so you can compete with them. Basically, negotiate with them again.
- Your customer’s business is starting to get sick: The good news is that they aren’t cheating on you with another supplier. The bad news is that you are just as responsible. Support your customers, help them grow, help them with their sales efforts, promote them in some way. Your company isn’t you, it’s them. A company without customers is a closed company, and very few companies look after their customers as if they were the main pillars of the business. The more they grow, the more you will.
4. No new customers are coming in
The crisis is a battle being fought in which soldiers fall, so you will inevitably lose customers, and if you lose more than you expected, you will have to put pressure on your sales team. Don’t wait for that. In times of crisis, you have to look for new customers and grow, taking advantage of the fact that you can get better prices from your suppliers.
If new customers aren’t coming to your company, it isn’t because of the crisis; it’s because you aren’t actively looking for them. A company is healthy when new customers arrive every month. Some months there will be more and some months fewer, but new faces must keep walking through your door.
5. Lack of motivation
This is the worst symptom, whoever suffers from it. It doesn’t matter whether it is the accountant, the administrative assistant, the salesperson or the cleaner who is demotivated. You can’t afford to have anyone demotivated in your company.
A demotivated receptionist will take it out on customers, and in the case of a salesperson it is even easier to work out what will happen: their sales performance will drop. Once again, ask why that person is demotivated, and look at yourself and your manager in case you are putting on too much pressure or demanding too much. Review your targets and make sure they are realistic. If the lack of motivation is about pay, create incentives linked to targets that are difficult but achievable.
And as a last resort, if the person is demotivated “just because” and it isn’t your problem, it may be time to invite them to leave the company before they infect anyone else.
Summary
Solve small problems before they become big ones, and never relax. If you relax, sooner or later you’ll be out of the game.
Further reading
- More tips for running a business in times of crisis
- 5 ways to grow your business
- The Art of War applied to business
- How to improve your company’s image
- How to be a successful entrepreneur
Featured image: Photo Credit: James Gathany Content Providers(s): CDC, Public domain, via Wikimedia Commons.
