Blog Post: Surviving Economic Downturns

First, let me point out that, regardless of the pain the rest of the nation is feeling, Colorado is not now, and probably won’t be, in recession, and certainly won’t go into a true depression.  Jobs here are plentiful and available, even at the top levels.  While customers may, thanks to the drumbeat of the candidates and the media, have cut back a bit on purchases, the economy in Colorado is very sound.  The Governor and Legislature, amazingly keeping campaign promises, have pumped a great deal of money into our economy and many new start-ups have been generated, as well as existing businesses being expanded.  There is a bit of cutback on capital funding, but nowhere near as bad as the media would have you believe.

That having been said, there is a perception that there are some problems in the economy nationally, and some of that is “trickling down” to Colorado .  Here are some tips for surviving and thriving in this time.

1).  Don’t lay off employees if at all possible.  Be creative.  One company I admire greatly let the employees vote on taking a little more than a week off each without pay or laying some people off.  The employees voted, almost unanimously, to each take a week off without pay.  The executives at this great company didn’t take their bonuses (very different from, say, Lehman Brothers, and AIG), and also took off time without pay, showing that they were sharing the pain.  Now, when things get better, do you think that these executives and this company might have some amazing employee loyalty?  You betcha!

2).  Cut back on unneeded luxuries.  Just after the government bailout, the executives at a company who had just received some of our hard-earned tax dollars took a week retreat at an expensive spa.  They should repay that money and be terminated.  This sends the wrong message to employees, stockholders, taxpayers, regulators and customers!  It is highly irresponsible.

I’m reminded of a large telecom firm in Denver .  When the president of this firm was telling employees that many of them would be laid off, an employee asked why they didn’t eliminate the company jet.  This moron didn’t really answer the question.  He indicated that there wasn’t A company jet, but several company aircraft, including helicopters, that needed to be maintained for the convenience of the executive staff.  It is clear that this company did not value its employees, but the selfish convenience of its executives who were too good to fly commercial.

Eliminate all executive luxuries until things get better.  It sends a message to employees and customers that the company values both its staff and its survival.  If the company is a public one, it sends a great message to stockholders.

3).  Reassure employees, customers, investors, stockholders, etc.  Let all of the stakeholders know what you are doing to survive and thrive.  Don’t underestimate the importance of “symbolic” gestures, such as the CEO canceling a vacation or converting a planned trip into a teleconference.  Come up with measures that everyone can participate in.  Even little measures, such as saving energy or paper, can result in some visible savings for your company.

4).  Be as honest as possible.  Don’t lie to your employees, vendors or customers.  But they don’t need to know everything, either.  Put the best possible honest face on any challenges you are having.  But don’t exaggerate the problems or assume that the worst is going to be the outcome.  Employees, vendors and customers can be of great help if they have an idea of what you’re going through, especially if you’re a smaller company.  For example, in the past my company has had a temporary cash flow “pinch” or two.  Rather than borrowing to fill the gap, I’ve gone to customers that were going to owe me money soon, offered a reasonable discount for paying me at once, and was able to avoid debt (and the interest that goes with it).  By honestly laying my cards on the table, I also built rapport with my customers, some of whom had ideas for increasing cash flow in those situations.  This input has helped me to build my company to the successful state it is in today.

Vendors can also be generous.  They might agree to wait on a payment, ship needed supplies without pre-payment, or give discounts of one kind or another.

Employees can often come up with ideas to turn things around.  Don’t discount the ideas of lower-level employees.  Executives don’t have the corner on brains.  And sometimes the lower-level staff member isn’t thinking in the box that the owners or executives are thinking in.  Asking for employee ideas not only generates good ideas (as well as some really stupid, but funny, ones) but also gives employees a sense of company ownership — a “we’re all in this together” mentality.  That mentality is the best one for employees to have, because they’ll bust their behinds for you.  Don’t underestimate the dedication, loyalty or selflessness of your staff.  Just make sure that you, also, maintain that attitude of employee ownership when things get better and assure that they share in the wealth as well as the hard times.  Employees do have memories, you know.

5).  Use all of your resources.  One of our clients took me and my business partner/wife Nicole out to lunch a few months ago and pointed out that we had resources that were going to waste.  We sat down with him and looked at these resources and found that, by utilizing them, we could add at least another 50% to the bottom line in 2009.  That was a pretty great lunch, wasn’t it?

Look at the resources you may have “lying around” and utilize them.  Is there a product that you haven’t pushed?  Intelligence you haven’t used?  An employee who could be better utilized to bring in more cash?  In our case it was a way of delivering a version of our service to many more people, and utilizing some materials that we had shelved to expand some areas of service.  What is on your shelves that isn’t being used?

6).  Look for anything that is “counter-recessionary.”  We have several services in our company.  Some do very well in a “boom” economy and others really shine in the current climate.  We’re small and flexible enough to switch the ratios of which services we push very rapidly.

Look at your products and/or services and see if some of them can be helpful in recessionary times.  For example, a fabric store might offer sewing lessons (utilizing someone already employed there as a clerk to teach the class) so people can make their own clothes and save on the high cost of clothing.  A luxury clothing store could, conversely, point out that well-made clothes wind up cheaper in the long run than poorly made ones because they last forever, and so on.  Almost every business has some area that can be marketed or emphasized as being helpful in a recession.  Even Starbucks, the ultimate luxury store, could point out that having a coffee meeting is much cheaper than taking the client to lunch!

These are a few of the tips to increase survival and thrive in this environment.  Keep in mind that this, too, shall pass.  If you can get through this, you will be stronger, have a more loyal staff, and be leaner and meaner so you can capitalize on the good times that will be rolling very soon.

John Heckers, MA, CPC, BCPC, is an executive, business and transition coach in Cherry Creek, Colorado .  He welcomes you calls at 720.581.4301 and/or your emails at jheckers@heckersdevgroup.com.  www.heckersdevgroup.com.  John Heckers answers all reader emails (and promptly deletes spam).  Read his other blogs at http://ceoskillscorner.blogspot.com and http://executiveexpert.blogspot.com.