Do not wallow in the mess of trying to make sense of it all but make some clear decisions based on some simple criteria. Do not get over-emotional and do not get over-complicated. All you are trying to do is run a business, ie buy stuff that people want at one price and sell it for another and make a profit in the meantime.

How difficult can it be? Well, this may be the time to get in some expert help to make sure that you are being realistic and objective about your business. So ask yourself the following tough questions.

For each question there should be an action point answering the question. Actions can be generated by asking “What are we going to do about it…? What are we going to stop doing… start doing… continue doing… do more of… do less of…?”

Some Crunch Questions

Where do you make the money?

How can you get and keep more cash?

Where are the Quick Wins, the low-hanging fruit?

What are the Long Shots?

What are your Top Five Products/Services?

How can you sell more of them? How can you getter better prices?

What are the current ‘opportunities’?

If you could only focus on three of them then what would they be?

Where are you currently wasting time and money?

Which suppliers/customers/staff/products are unprofitable? Which ones should you fire? When will you do it?

And to answer the question ‘When should you do all this?’, the answer is ‘NOW!’

Each seems to appeal to a different style of owner when there may actually be a more sensible middle path.

Now is the time to stand out! Recession, what recession?

A more contrary view than the ‘batten down the hatches’ approach is to see the downturn as the time to stand out from the rest. Investing in your people; creating and selling new products; reinvigorating your business promotion activities and generally shouting from the rooftops that you’ve never had it so good.

By implication you are saying that you are better/safer and more reliable/successful than your competitors who are clearly struggling.

This high-risk strategy will get you talked about but the real concern may be about your stamina to survive the prospect of literally haemorrhaging cash should your cunning plan not pay off. So, how deep are your pockets?

The most dangerous time in a recession is after its peak. This is the time when you really need to be able to invest in the business to take advantage of the turnaround. This is the time when you are most vulnerable and you probably have the least spare cash to invest in your future survival!

The truth about how to approach the recession probably lies somewhere in the middle of two extremes: On the one hand don’t talk your business into receivership (reducing prices may well be the first nail in your coffin), but on the other hand don’t be stupid (spending money unnecessarily).

A systematic, structured approach to your business should get you through the bloody battlefield ahead.  The first thing you need to do is assess your current business performance. Realistically look at your current activities and make some sense of what is going on.

Batten Down the Hatches! The typical survival approach is like a doom and gloom monster feeding itself on itself: all new purchase decisions are put on hold; training, consultancy, advertising and sales budgets are frozen; all debtors are chased unreasonably; creditors are kept waiting; prices are reduced to ‘be more competitive’. It is all bit of a slippery slope.

In an attempt to avoid literally going over the edge, many owner-managers start lying at this stage. They lie to staff and suppliers – initially these are just white lies. But soon they can’t remember who they’ve told what and the deceit starts to catch them out. And of course they start lying to the wife/husband in a vain effort ‘to protect them from stuff they wouldn’t understand because thing will change soon’…

Competitors, suppliers, staff and customers all smell the panic in your behaviour. The bank gets nervous; the vultures get excited. Everyone starts asking about how long you think you might be able to survive. Someone kindly gives you name of a friendly insolvency practitioner who can make things easier for you.

And even if you survive the downturn, your miserly approach to anything that might help you to grow the business means that you no longer have the resources or deep pockets to invest and be ready when the recession is over and the new world of opportunity finally appears.

Hope is not a method!

The reality is that it may be illegal to trade without profit but it is impossible to trade without cash.

So how do you keep your head above water? It isn’t rocket science, but very few people seem to follow the basic steps.

1.  Measure cash-flow like a hawk – it is your business so it is your responsibility to know exactly how much you owe, how much you are owed, how much you have got and how much you are going to need. Do the numbers.

2.  Do the cash-flow projections – depending on how close you are sailing to the wind and how big the fluctuations are, do cash-flow projections every quarter/month/week. Failure to do so is entirely inexcusable.

3.  Have clear credit terms on your initial contract and on all subsequent invoices.

4.  Check all new clients’ credit records – and watch them until they have proved themselves to be reliable.

5.  Have a rigorous process for invoicing, following-up and collection. Be reasonable but be firm. Talk to anyone who owes you money. Listen. Be clear and be firm. It is your money that they owe you.

Also recognise that a tightly-run credit control system is useless if you are not making the profit in the first place.

As Michael Porter says, “Cutting prices is usually insanity if the competition can go as low as you can”.

The last person to listen to is the old grey-hairs who start the conversation with the phrase, “When you’ve survived as many recessions as I have…”. (Well, that’s what I thought when I was in my twenties and setting up my first business!)

Please note that, despite what they say, there is no evidence that their actions saved their businesses. What we have here is called “survivorship bias” – we only listen to what the survivors claim made them successful and assume these actions caused their success – the old cause and effect (or chicken and egg) conundrum. What’s important to note here is that we ‘listen’ to the winners but not to the losers; and both justify their position by (re-)writing their own history to fit the results; so listening to their side of the story may not be that helpful.

Most ‘research’ ignores the key fact that the difference between the winners and the losers is marginal. There are more similarities than differences. Maybe the big difference is just luck: being in the right place… or bumping into the right people… or randomly deciding the right price… or making ‘that phone call’. Meanwhile the successful, the survivors, attribute their ‘results’ to their skill. Nonsense – success comes from doing the right things and being in receipt of a generous dose of good luck!

Surely it is more than a decent dose of luck and a jammy role of the dice!

#6 DON’T BUILD THE BUSINESS AROUND YOURSELF

In the early days it’s great to see those emails and texts for you – you are important and wanted. However, this excitement soon turns into an addiction. Your definition of success starts to depend on how much you are needed. Wrong! (unless you want to be the bottleneck in your business).

Try to design the entire business model with the sole intention of getting it to operate without you. Or do you enjoy working 24/7?

‘Start with the end in mind’ is what Steven Covey says. If you intend to get out of your business at some point then you need to design the whole thing with that endpoint in mind. Otherwise you end up as the tiredest person in the graveyard!

#7 DON’T CARRY A BLACKBERRY 24/7

The world will not grind to a halt if you are not there to take every call. In fact customers might treat you with a bit more deference if you ration your available time with a bit more respect for what is really important.

#8 DON’T PLAY IT TOO SAFE

The riskiest thing is to be safe… Very good is bad… because no-one notices it.

#9 DON’T BE REASONABLE

“The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends upon the unreasonable man.”
- GB Shaw

Are you being reasonable?

“Most people are reasonable; that’s why they only do reasonably well.”
- Paul Arden

#10 DON’T TAKE IT ALL TOO SERIOUSLY

No-one enjoys working with a bore… and while we are at it,

#11 DON’T FORGET WHY YOU ARE DOING THIS IN THE FIRST PLACE

When you are on your deathbed you will not say “I wish I‘d spent more time at this office”. Get real, have fun, laugh and lighten up!

#12 DON’T GET THE NEGATIVE FEEDBACK HABIT

We spend 95% of the time focusing on the 5% of things in our businesses that don’t work… and only 5% of the time focusing on the 95% of things that really do work.

The old 80/20 rule tells us that we can get a pretty approximate/good solution in the first 20% of time spent on a problem. The solution doesn’t get twice as good if we spend twice the time on it. If we do screw up we already know about it so let’s recognise the mess and get on.

In his ‘Winning’ book, Clive Woodward describes just such a situation. In summary, he says that if the team lost there was no point dragging the team into the boardroom to dissect and analyse every action made that (may have) contributed to the poor result… It was only when the team won that he would take them into the boardroom to dissect and analyse every action made that (may have) contributed to the good result, ie he got the team to focus on what they were doing right.

If you get/see what you focus on then it seems mad to focus on what’s gone wrong and it seems obvious to spend more time looking at what really works.

Each Friday…

“Each Friday ask all your reports to tell you on a single page what important things happened during the week and what they mean for the business” says Jack Trout.

Too right!

#1 DON’T EMAIL FIRST THING OR LAST THING EACH DAY
For me that reads: “Don’t email before 10.00am or after 4.00pm.”
Emailing first thing screws up the day as you get distracted beyond belief. Emailing last thing screws up your sleep pattern - it can wait till tomorrow!

You must define one important/key task for each day and that must be your first priority.

#2 DON’T CHECK EMAILS REGULARLY
For me that reads: “Don’t email before 10.00am or after 4.00pm and only check them at set times, say 10.00am and 3.30pm. You must define one important/key task for each day and that must be your first priority. Email addiction will destroy your business and screw up your brain”.

#3 DON’T ANSWER CALLS FROM PEOPLE YOU DON’T KNOW/RECOGNISE
Never ever answer a call unless you know who it is from. You should have a PA or virtual PA screening all your calls. Let them know who you will and who you won’t speak to and instruct them as to how to handle the various different types of call

eg keynote speaking enquiries to Trish…, Consultancy enquiries to Lesley and so forth.
Because we create our own businesses around ourselves, we end up being involved in way too much. You should be designing the business so that it operates without you.

Try putting autoresponders on your email that say “I am out of the office but consultancy enquiries can be dealt with right now by Lesley at lb@directorscentre.com or on +44 (0)1225 851044 and keynote speaking enquiries can be dealt with by Trish on….” You could do the same with your direct line answerphone if you don’t have someone to filter your calls for you.

Just stop talking to people you don’t know - the call is probably for their benefit and not for yours!

#4 DO NOT TURN UP TO MEETINGS ON TIME
This is known as Lombardi Time.

The great Hall of Fame football coach of the Green Bay Packers, Vince Lombardi, invented a strategy that he recommended to his coaches and players.

Lombard Time states “Show up for every important business meeting 15 minutes ahead of the scheduled meeting time.”

The idea is to use the 15 minutes to catch your breath, collect your thoughts and preplan what you want to accomplish in the meeting and how you’ll go about it.

I hate being late. If others are late I consider it the height of rudeness (can’t they be bothered/organised…).

Here’s a thought from Jack Carroll’s blog… If you look closely (because you arrived early…!), you’ll see people arrive at meetings, and this will tell you a lot about the way they lead their lives.

#5 DON’T WORK WITH (OR EMPLOY) ENERGY SAPPERS
This is ’stolen’ from Clive Woodward.
From time to time we all work with energy sappers/zappers and don’t we just know it! They seem to squeeze every last ounce of passion and excitement out of any project. Their mantra is some permutation of:

“Yes but…”
“If only…”
“They won’t/can’t'/haven’t/shouldn’t/couldn’t…”
“Well, if that’s what you want to do…”
“I don’t really see the point of…”
And don’t the energy sappers just love the “they” word. “They did this…”, “They do that…”

Oh how I hate these people! They become high-maintenance (and usually low-profit) because of the damage they do to your own immune system. Their stress and negativity-dumping behaviour sucks the very lifeblood out of your most precious asset - your enthusiasm.

Replace all energy sappers with energisers - it is as simple as that!

Now is the time to get you out of the loop that is your belief that people have to talk to you in person (and right now), and if your phone doesn’t ring then you feel unloved…

Put a message on your device saying “Thank you for your enquiry but I am unable to reply right now – contact X to talk about this and contact Y to talk about that. I will be collecting messages at 4.00pm and will only be able to get back to you then”. Of course you’ll need to find a Mr X or Ms Y (in the office or on the web) to whom you can delegate the jobs.

What this does is train all your old dependants to look elsewhere for the answer they want.

If you have a semi-sophisticated answerphone then you can filter people to the appropriate extension, but I am sure you get the idea; it is all about you stopping working IN the business and spending time working ON the business.

In essence, I am advocating the creation of a business model, a system that has you almost totally written out of the script. Now there’s a thought!

1. Mess around with the products/services you sell…
2. Mess around with the markets/people you sell to… or
3. Some combination of the two or
4. Keep doing what you are currently doing.

That’s it.

At the Growth Strategies Conference in London, they asked the audience the question “How do you plan to grow your business?”

The results of the vote was as follows:

I plan to grow the business:

• 33%: existing product/existing market (No. 4 above)
• 17%: new product/existing market (No. 1)
• 36%: existing product/new market (No. 2)
• 14%: new product/new market (No. 3)

So what does this tell us?

• 69% of the voters are sticking to selling their existing products (phew!) (Nos. 2 & 4)
• 31% of the voters are using a new product to grow their business (Nos. 1 & 3)
• 14% have gone for the high-risk new/new option (No. 3)

The above can be translated into a 2×2 matrix and is the only really stunning piece of business school theory that is really valuable (it is referred to as the Ansoff Matrix).

• Irrelevant
• Using a whole load of assumptions that are probably false.

More importantly, your business model, how you do business, is also based on a whole load of false premises.

Frightened of what it means to acknowledge that things aren’t working as well as they could, you plod on pretending that your current systems are proven/tested/reliable because it causes too much heartache to start over again.

When you do go on your very occasional strategy awaydays (or whatever pretentious name you call these little excursions), you spend little time focusing on the ‘results to date’ and then spend time creating a lot of grand-sounding and impressive plans for the future. And all this is based on your existing model.

We never properly stop and check out whether we would use the same process/systems/model if we were to start again today. And that is really dumb.

So, tear up your business plan and the whole system. Bin it… erase your memory and start with a fresh, clean piece of paper.

Your old thinking was based on what you thought was right way back when; ever since then you have been justifying those original assumptions rather then considering if they were flawed then (never mind now!).

Starting afresh is liberating. No more sacred cows… all you need do is consider what it is that your customers want now (and in the future) and what is the best way of delivering it to them.

Scary but exciting! Have you got the bottle?