Business Cycles Are Difficult … But Healthy
Those of you who read my weekly column regularly know that I’m forever the optimist. That being said, I’m also a realist. I’m also old enough to have lived through several recessions and know that the business cycle we’re now in is a recession — and it’s shaping up to be a bad one. I also know that, just like before, most of us will come out of it. Recessions are to businesses what forest fires are to forests: necessary, evolutionary cycles that are painful, cleansing and, ultimately, beneficial.
During such cycles, the weak fold or merge and the survivors “retool” to become more productive and effective. The first step is to decide, realistically, which group you’re in. Then, plan accordingly. The next several months, most likely the next year, are going to be very difficult. Even though I have all the faith and confidence in our industry, now is the time to be brutally honest and realistic with yourself. Gather your trusted team and deal with the facts at hand. The numbers don’t lie.
I suspect most of you have had a very challenging October, with November not looking much better. You find yourselves wondering how bad will it get, how long will it continue and how long can you last? All are good questions. Like any good businessperson, you must be prepared for the worst and hope for the best.
I’m sure you and your fellow managers have been thinking about some of these issues, but if not, now is certainly the time. Action’s required now. Take a look at the following areas to address.
* Circulation is our lifeblood, so cutting it drastically is always a bad move. Trimming the fat from your mail plans, reducing the cost of your mail pieces and other cost-reduction moves that don’t impact circulation are needed now.
* Staff reductions are inevitable. Now is the time when performance counts. Your marginal contributors must be given a chance to be successful somewhere else. Next to mailing costs, payroll is usually the second largest expense of a catalog company, and the only place where meaningful cost reductions can be made quickly.
* Apply technology. When you look back over the last 30 years of cataloging, the big productivity improvements have been made when new technologies have been applied. Don’t be afraid to invest in productivity-boosting operating software, database modeling, Internet marketing technologies and other places where new technology has changed the game. Remember, the definition of insanity is continuing to do the same thing and expecting a different result. You must adapt now!
* Outsource to save money. Now may be the time to finally give up control of some function you’re doing in-house that could be performed better and cheaper by a third-party. Are you still really the best person to run your call center, your HR department, your IT department, your warehouse?
* Focus on your core strengths and what’s working. Sometimes, by making more of your successes you can surpass the benefit of cutting the things that are going poorly. Now, more than ever, you need to focus on the right two or three things that are going to make the big difference.
* Communicate. Communicate. Communicate. Your employees are worried too, and need reassurance, confidence and, most importantly, direction. Never leave the helm in a storm.
* Have faith. Those who remain positive and focused in the face of adversity or insurmountable odds are true leaders. If your sales have dropped 20 percent in one month, the challenge may look daunting, just as it did immediately after Sept. 11. At the same time, remember that “this too shall pass” and you’ll, hopefully, emerge leaner, meaner and stronger than before. Just like the forest after the fire.
Click on the “Post a comment” icon below or e-mail me at TerryJ@AbilityCommerce.com and/or post your comment on this site.
Terence Jukes is president of Ability Commerce, a 140-person firm that designs, builds and runs e-commerce and related marketing programs for catalog companies. He can be reached at TerryJ@AbilityCommerce.com.