4 warning signs of depression that Don’t Survive, Thrive in a Recession – Grow Your Profits in a Down Economymust look out for

There are 4 distinct practices the other 6% consistently follow.  You know the ones.  The guys and gals that say, “My business is up.  What recession?” Possible but not you?  It can be with a few simple best practices.

4 Best Practices the Thrivers Follow:

1. Define your business purpose and principle
2. Define your worst case scenario
3. Identify Warning Signs for Trouble
4. Map Out an Aggressive, purposeful, principle-minded, plan and get started.  Then… Never Look Back

1) Define your business’s core purpose and principles

Defining your business’s core purpose and principle are not only a good idea, it’s necessary.  Without a clear idea of what you are setting out to accomplish and a sense of what you will and will not do you’ll be totally lost and feel overwhelmed.  Soon after you’ll give up. Then you’ll be something your not. A quitter.

Your core business purpose can get lost or whitewashed over time.  Economics booms disguise this painful fact.  You get busy doing business or bus(y)ness and hey, your making money right? You must be doing something right.

Think back. What was the reason you got into doing what your business does?  No. The real reason.  Seriously, the real reason.  Sorry being repetitive, but it’s necessary to shave the onion down to it’s core layers.

Your principles on the other hand are related, but not the same.  These are the will do’s and the won’t do’s to achieve your purpose.  You might spend $1000 on a radio spot to announce an upcoming promotion at your chicken restaurant when you have zero money, but you won’t dress up in a chicken suit and hand out flyers.  Respectable, sure.  However, that 94% that don’t excel in economic downturns usually don’t clearly know what they will and won’t do for their business.  In fact, most don’t know what their business purpose is.

Example (Charley’s Fried Chicken):

Purpose: to provide a home-cooked meal in a restaurant environment that makes people feel like they belong in exchange for a higher than normal price.

Principles:

Wills:

¢    Call all family members and friends to related promotions.
¢    Join civic groups that help people feel they belong.
¢    Spend 5%-10% of my budget on advertising.
¢    Foster a work environment in which employees treat guests like family.

Won’ts:

¢    Chicken suits.
¢    Ask diners to “pardon our progress” (not really progress if it has to be pardoned)
¢    Inconvenience our customers in any way
¢    Tolerate rude employees

2) Define your worst case scenario

Crunch Time.  Crunch the numbers.  Determine how long you can last at the current levels.  There is an automatic freedom that comes with knowing when this is.  Other “important matters vanish in the face of certain death. Many terminally ill patients report finding that freedom when they are told, “you have six months to live”

Do a Cost/Benefit Analysis

Do a Break/Even Analysis

List all possible ways you could be PUT out of business.

1)    Competitors
2)    Creditors
3)    Investors pull out
4)    Suppliers with relationship discounts go out of business
5)    Customer’s Health Financial
6)    Customer’s Health Medical
7)    Local/Regional/National/Continental/Global Demand
8)    Filing for Bankruptcy

Notice that none of these involve you being personally injured.  That’s right.  You are going to be ok, even if everything falls apart.  You are a tried and true entrepreneurial veteran with the scars to prove it.

Colonel Sanders failed at business tens of times before embarking on the “Secret Recipe” 7 of those were in the restaurant industry.

Thomas Edison failed thousands of times. Yet we are surrounded by electricity and the light bulb.

Babe Ruth’s strike out average well exceeded his Home Run Record.  That’s a really good one.  You have to step up to the plate in order to score and you know how that’s done.

You are an Entrepreneur.  You “Generate” business not show up and hope you get some.  You are a Rainmaker.  Not an umbrella.

Reality Check – Being Optimistic is necessary and a trait that most successful Entrepreneurs share.  You also need to have a Face the Music Session.

3) Here are 5 Warning Signs That Something Needs to Be Done NOW.

1) Has your traffic slowed to a halt? If no, but sales are off is price a concern? Can you do business profitably (or fulfill your business purpose – for all you non-profits out there) at what the market will bare?
2) Have you turned focus from profit per unit to unit only measures in because of the FEAR that you need to lower price?
3) Have your 30/60/90 agreements with suppliers been slipping? How about your clients 30/60/90 plans with you?
4) Have you turned to “personal financing resources” (personal credit cards, no paychecks, etc.) in order to maintain Boom-Time Practices?
5) Have you taken on more work that you SHOULD handle because you let some people go?
4) Retarget Your Efforts and Thrive

OK.  We’ve covered the HARD stuff.  Now let’s “Steal Home”.

In the years following the stock market crash of 1929, better known as the Great Depression, the companies that came out on top (Sears, US. Steel etc.) did this: They Got Lean. Not Anorexic.

Cutting Costs is good, but cutting people that are important to your core business purpose and processes is not. Think “Refine” not Eliminate. The Got Aggressive in Targeted Marketing. Beef up ad dollars on things that have CLEARLY worked by eliminating the ad promotions that are labor & cost intensive. Niche down your Core Customers and target them specifically. Offer Exceptional value to those core customers and watch them advertise for you.

They Focused on the Bright Spots in their business and industry and pay NO attention to negative press.  Bad news a travels fast and because of our highly information-bloated society, it travels far too often too. They Got Aggressive Recruiting. Other businesses are cutting good people. (REALLY GOOD PEOPLE).  Those really good people are looking for work.  Be very selective and structure their incentive to offer value to your customers (not just you). If the customer is happy and pleased (not satisfied… PLEASED) business will stay good. There are tons of ways to prosper when times are good.  Be part of that 6% that does it when times are bad by using these Best Practices in your business.  Your customers will thank you and you’ll thank yourself.