Editor’s note: This article was first published in February 2011, in the middle of Spain’s economic crisis. The references to recession, lost customers and shrinking workforces reflect that moment.
When everything is going well, even the “dumbest” person gets good results. In Spain, in fact, people have always said that the most incompetent person can end up as a company’s boss or manager. But when things get difficult in a company, our true worth comes to light, because that is when the company needs a real leader, and incompetence is not among the qualities a company looks for in its leader.
Companies now want to increase results with fewer staff, fewer customers, a recession and, of course, fewer resources. If you want to show what you’re worth, your moment has come (if you’re up to it, that is).
Hundreds of companies have realized that, beyond a degree in business administration or economics, they need someone with new ideas and other skills that you don’t pick up at university.
Practically everyone knows that 2 x 2 is 4, but few people know how to multiply 2 x 2 on the income statement. The fact is that there are companies that close in times of crisis and others that grow, and since not everything in life is luck, we could conclude that the companies that grow do so because they have come up with new strategies thanks to new ideas from their leader.
In times of crisis, a leader must know how to gain an advantage despite having fewer resources: increase sales with a smaller sales team, produce more with fewer production staff, build strategic alliances, enter new markets, and so on.
If you can’t do this, you’re not a leader. You simply got a boss’s job by being handpicked, and not on your own merits. They put you in command of a ship without knowing how to navigate, and when the ship reached the open ocean, the crew saw that they needed someone who knew what they were doing to get back to port.
What does a good leader do in times of crisis?
With fewer resources, other strategies are needed, but we’ll start with the basics.
1. Look after your sales team and set realistic targets
Creating an atmosphere of panic about job losses if targets aren’t met won’t get you anywhere. Fear of being fired creates pressure, and pressure is not good at all. To begin with, review your targets, which can’t stay the same once you’ve lost customers. Give your sales team more realistic targets, adapted to the new situation.
2. Look for new customers
You’ll need new customers to make up for the sales lost with customers who left, and you may have to go out yourself to win some clients who call for the presence and negotiating skills of someone more senior than a sales rep.
Visit former customers who stopped buying from your company for some reason, and renegotiate with them.
3. Build strategic alliances with other companies
In the United States, strategic alliances between companies are the order of the day. In Spain we never quite seem to go for this option, and that’s why we tend to see many more businesses close here. You can find some ideas for growing your business in our article 5 ways to grow your business.
4. Create new business models to increase your output
A time of crisis is a time for outsourcing. In-house manufacturing may have been costing your company money for months, so depending on your sector, it may be time to outsource certain services.
When you outsource production, you tend to find out a product’s real profit, something you don’t know when you make it yourself. Outsourcing transport when sales have dropped also tends to bring higher profits, because you do without some salaries or fixed costs (careful: we’re not talking about firing staff).
Another business model for growth might be to set up distribution points or franchise part of your business. It’s a way to gain visibility in other places with minimal investment.
5. Two options: fire or hire
In times of crisis, most companies tend to choose the first option, which is to lay off staff to save money. In other words, cutting wages to keep net profits in balance with lower sales. That is one option, but another is to create new departments in your company and move workers into them. Read the article: Business strategies for times of crisis
6. New markets
If your province no longer gives you enough sales, it’s time to go out and look for new customers in other provinces or other countries. Don’t be afraid to sell abroad (it happens every day). In fact, I’m sure your company buys products from another country that have a distribution network in Spain.
The time has come to notice those small details, even at the café where you have breakfast, because the solution you’re looking for for your company is right in front of you at every hour of the day.
And by new markets we also mean new products. However hard you try, your product may have been dropped because consumer tastes have changed. Maybe it’s time to add, to give an example, shirts or underwear if they now sell better than pajamas and swimsuits.
7. New resources
Having talked about new business models and new products, let’s now talk about new technologies. The internet is the key tool for being present all over the world and making buying easier for consumers.
Improving your company’s website, making it more visible online and selling through it will be part of your responsibilities as a leader as you look to create other business models.
These are some of the things you’ll need to do as a leader. Clearly, nobody expects you to understand all of this, but you do need to be able to hire the right people to carry out all these strategies.
Remember: a leader doesn’t have to know everything, but does need to know how to surround themselves with professionals who do.
In times of crisis, anything goes to keep a company afloat, except sitting around waiting for the situation to improve by itself or for our guardian angel to enlighten us. As I said at the beginning, now you have the chance to show what you’re worth.
“If you think you’re worth a lot, that’s what you’re worth. If you think you’re worth nothing, that’s what you’re worth.”
Further reading
- Hiring a leader: a leader’s mistakes
- How to be a successful entrepreneur in business
- Common mistakes of Hispanic business owners
Featured image: Egide Linnig, Public domain, via Wikimedia Commons.
