For many businesses, a slowdown is inevitable. Whether it’s due to seasonal fluctuations, poor decision-making or circumstances out of your control like a slow economy, a slowdown presents an opportunity to fortify your business and restructure your foundation to chart a comeback.
Here are five tips to make the most of a downturn.
1. Shore Up Your Cash Position
There are instances where a revenue slowdown coincides with a slowdown in revenue-related expenses. For example, a construction company sees revenue and upfront cash outlay for materials shrink simultaneously. Fortunately, existing accounts receivable continue to convert into cash as invoices get paid, resulting in a situation where you still have positive cash flow.
This puts you in a position of strength, even though overall revenue has decreased. With a greater cash balance, you can quickly seize opportunities that arise. That could include taking on a new client or large order, or securing inventory at a deep discount.
2. Look for Efficiencies
One downside of growth is that it is very difficult to simultaneously find the time to improve operations, which require special attention as growing pains emerge. Most business owners have difficulty balancing growing a business against doing what it takes to manage that growth. So, use a slowdown as an opportunity to streamline your operations and evaluate your processes.
Survey your employees and ensure you are providing tools that simplify their jobs, not complicate them—especially technology investments. Consider moving file storage to the cloud if you haven’t already, or upgrade workstations to minimize downtime and maintenance. Examine your business and find out where you can add value to reap the benefits.
3. Build Your Sales Pipeline
Sometimes business slows down because you haven’t properly maintained your sales pipeline. When business is booming, fulfilling orders and managing people can take precedent over building and optimizing a sales and marketing strategy. A slowdown is the perfect time to organize and double down on your marketing and sales efforts. Just remember to maintain your efforts when business picks back up.
Less incoming work also provides an opportunity to reconnect with past, dormant or current clients. Relationships are the heart of any business, and getting in front of your customers not only demonstrates your commitment to them, but also gives you a better sense of their needs. Even existing client relationships need to be nurtured. Your meetings may reveal opportunities for working together on a larger scale.
4. Get Lean
If the slowdown is economic or structural, it’s time to tighten the belt and start hustling. If you normally had a crew of 10 but had to hire 20 employees during the peak of the economic cycle, chances are that you may have brought on a few people that wouldn’t have normally made the cut during that hiring spree. Consider paring down your staff to your “A” team, cutting back hours or negotiating better rates with contractors.
Externally, you can also negotiate more favorable terms with your suppliers and vendors. For example, request a discount for your bills, or ask for Net 30 day terms instead of Net 15 day terms or due upon receipt. If cash flow remains a problem, consider a bank line of credit, invoice factoring services or other working capital solutions to ensure you can make payroll and pay bills while waiting for invoices to be paid.
5. Take a Vacation
Despite ample evidence that taking time away from work carries health, creativity and productivity benefits, many Americans leave vacation time on the table. Last year, unused vacation days in the U.S. hit a 40-year high, and nearly 42% of Americans didn’t take any vacation days. If the slowdown is purely seasonal, it might be a great time to encourage employees to take some time off and gear up for the busy period.
Though unwelcome, slowdowns give you time to conduct an in-depth evaluation of your organization and priorities that you simply don’t have when things are going well. By keeping these five simple ways to use a slowdown in mind, you can turn an underutilized period of time into an opportunity. Seizing this opportunity can be a silver lining that business owners would be wise to make the most of.