Those with an ear to the wind are preparing plans to cope with a triple dip recession – reinforced by Bloomberg Business Week, which reports of a downturn in orders from leading indicator companies.
The downturn – reinforced by indicators such as a flattening of demand for obscure but important chemicals forecasts trouble ahead – is not a cash flow issue.
Moving across the pond to the UK, my What If Forum members are also experiencing slowdowns in orders and longer decision lead times. Many have a growing feeling things are not what they should be – sending a third dip around the corner.
As a business strategist, executive and What If Forum chair, I have learned that it is unwise to ignore warning signs – particularly when they are coming from a number of diverse and unconnected sources.
With the prospects of the summer holiday just around the corner, it is easy to push these concerns to the back of your mind. However, recent experience tells us to plan for the worst and hope for the best.
Here are 5 steps to take to be forearmed for the third dip of the recession.
1. Check Customers Forecast and Plans
Make a concerted effort to talk to your key customers, ask them about how they are finding things in their marketplace and what their future forecast and plans are like.
2. Tighten Inventories
Confidence in the past two quarters has in many instances lead to a build up of inventory, often for good reason however, now is the time to take a fresh look at these and cut back where possible. Again check suppliers cycle times and see if they can help to reduce your stock holdings.
3. Take Action Over Slow Growth Low Profit Products and Services
As in the summer garden, now is the time for some cutting back and weeding and the same applies to your business. You know the ‘dogs’ in your product and service range, now while times are reasonable is the time to take action over them killing off those that are tying up vital working capital.
4. Put Sales and Marketing Under the Microscope
With the help of a fellow What If Forum member Mark Lewis of Analox, world class leaders in gas sensing technology, I conducted a root and branch review and assessment of the company’s sales and marketing operations. While they were doing many things right, a fresh pair of eyes highlighted some serious underperformance in both sales and marketing. In the last month Mark and his team have worked hard to address the shortfalls and are already reporting an up-lift in enquiries and forward orders.
5. Start Mining Your Customers’ Data
Six months ago a What If Forum member hired a recently graduated Maths major setting her the task to sift through their customer data to find any interesting trends and patterns. What she came up with blew away many preconceived ideas and assumptions and highlighted some major missed opportunities. Capitalising on these the business turnover is now only ten to fifteen percent down year to date in an industry that is thirty to forty percent down.
Plus, the business is turning in a profit to match last year where many competitors are putting up the for sale sign. What are you missing in your customer data?
Share with us what you are doing to prepare for the third dip of the recession?