Analysts say that the Great Recession which began in December 2007 came to an end some time last summer, but all evidence suggests that tough economic times are still with us.
The National Bureau of Economic Research tracks personal income, business sales, payroll and industrial production to form a coincident index useful in determing a recession’s end. That index rose in July, August and September, signaling the recession’s end.
Ask any business owner how things are going and you’re likely to get a mixed bag of answers. While many will agree that things are better right now then they were exactly one year ago, these same people will probably also say that business is well below levels reached before the recession began.
Depending on the government to fix things will likely lead to a major disappointment. All evidence points to an anemic recovery with looming tax increases likely to impact businesses to some degree. The federal government is operating in a sea of red ink while state governments, who by law must balance their budgets, are cash strapped and faced with trimming fat or raising taxes.
You’ve navigated through the worst of the storm, but obstacles remain in place. Let’s take a look at some things that can impact your business and what you may want to do about them:
Compensate – You may have laid off stay and/or instituted a salary freeze or asked everyone to take a pay cut. But be forewarned: your top talent will jump ship if something better comes along. Consider restoring what you’ve cut, presenting bonuses or increasing salaries starting with those people you can’t afford to lose.
Communicate – Step up your communication with your staff to let them know how the business is doing and what your business forecast is. Better compensation may lure people away, but so can incorrect thinking that the ship is sinking even when you know that your business is sailing along. Keep everyone in the loop!
Indoctrinate – Your staff needs to know how today’s business realities affect the business. They also need to understand where you’re taking the business and how they can play a part in helping bring it there. You can explain how things are, but now you need to show them how to get there. According to a Harvard University study, “A major reason so many managers do not assist subordinates in improving their performance is, simply, that they don’t know how to do this without irritating or discouraging them.” Offer praise and constructive feedback; follow up and reinforce as necessary.
Evaluate – What is it with your business that can still be changed? Pricing may be a huge factor, but don’t cut prices automatically as you may find it difficult to raise them later. And what about raising prices right now? Can this be done? According to business coach Brad Sugars you can, but perhaps only if you provide an “added value” with the increase. That could be anything including an additional service or perhaps quicker turn around time on a project.
Delegate – Could some of the tasks currently handled by your company be outsourced? Maybe your accounting team is already handling sales, but they can’t go after sales because they are bogged down with accounting. You’re not ready to hire new staff; perhaps finding a company to handle your work would be the best approach. Oh, and avoid off-shoring if you can: it may be cheaper up front but the time differences and cultural expectancies may be too much to handle.
There are other things to consider as you move forward with your business including raising capital, investing, even a business expansion through an acquisition or merger. Weigh everything, but be prepared to act quickly. Your competitors are doing the same and may be one step ahead of you.
Adv. – Are you considering buying or selling a business? Let the NACBB Business Brokers team help you out. They can work with you to develop a plan to make your business transaction a successful one.
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