Recessions are opportunities- You just need to learn how to make use of them
By Murtaza Manji, Business Strategy Coach, Kaizen Consulting
Murtaza is an entrepreneur, business strategy coach and speaker based in Dubai, UAE. Over the last 6 years of running Kaizen Consulting Group, he has worked closely with over 600 CEOs and Business Leaders from the GCC, UK and Tanzania – where he originally hails from. Murtaza is brought in to work with businesses looking to scale, grow their financial results and achieve organisational growth targets.
A recent article by Reuters unveiled the true nature of Dubai’s current economic slump. According to the statistics, residential property prices have dropped by more than 15% since late 2014 and are still falling. The stock market was down 13% last year, the worst performance in the region.
What impact did this have on businesses, and more specifically, SMEs in the region? According to the Dubai Economic Department, only 4,722 new business licenses were issued in the second quarter of 2018, down 26% from the same period in 2016, the year when new licenses peaked.
Although the falls may be temporary, it is critical for businesses in the region to implement robust systems, structures and strategies to help them not just to survive the recession, but to create sustainable, measurable growth through it.
The first important thing to note is that recessions are temporary, and very much part of the economic cycle. The key to being successful is to recognise this, and bgin identifying opportunities where you haven’t thought to look before. Recessions, although tough, have several advantages for businesses are looking to win. We will go through a few of them below:
They get rid of bad competition
When dealing with an external challenge, such as an economic recession, chances are your competitors are facing the same issues and challenges that you are. And while every business has a certain level of preparedness for such problems, many market players are not ready or able to weather the storm. Downturns, whether local, regional or global, take a lot of bad players off the field, which eventually leads to a healthier competitive market.
. Have a plan to create marginal, short-term profit regardless of a fall in revenues.
. Examine the strengths (a robust sales process, maintaining great customer relationships, etc.) that have made you successful to date, and focus on them.
. Reconsider your cost structure and re-build your value proposition based on what customers need.
They push you to focus on what’s important
One of the most common practices businesses undertake during a recession is tightening up on budgets, and most commonly, it’s the marketing budget that takes a hit. There’s a famous quote that sums up this challenge well: “50% of my marketing works, I just don’t know which 50%” And the punishment for this willful ignorance comes during tough times: businesses are scared to invest in marketing because they don’t know where to put their money. Unsurprisingly, this leads to further reductions in revenue and compounds the problem. It’s easy to overlook inefficiencies during good times.
Your responsibility, as a strategic business leader, is to ensure your teams develop tiers of marketing tools: those that are tried-and-tested, and project a steady and reliable ROI, vs. those that are “experimental”. When your competitors cut their marketing activities because of uncertainties, you’ll know what to focus on: measurable, proven, and efficient marketing strategies and tools that will help you make the difference between being a survivor and a winner.
Use KPIs to track everything – from sales team performance to marketing channel conversion. Use these numbers when making tough decisions.
They give you a reason to get out of your comfort zone
Complacency is a silent killer. Everything is alright, ticking along, stable… and suddenly you see a recession approaching at a speed you never expected. Such situations certainly push you out of your comfort zone; throw you head-first into the deep-end of a present issue. You don’t have time to gather your board or staff for a series of pointless meetings and create an action plan with a long list of recommendations (which none of the board members is keen to stake his or her status on).
Challenging times make you roll up your sleeves, grab your gear and get into the trenches. Few battles are lost in the war room, most are lost at the front line. Conversely, the same applies to battles won. Getting out of the boardroom and onto the shop floor is perhaps one of the best solutions I can offer to businesses facing difficult circumstances.
When facing a threat, we think faster, wiser, and clearer. What’s even better is to train yourself to be out of your comfort zone, so when recessions hit, it becomes a habit to deal with them and get the best out of them.
When your team see you on the floor, they buy into you better. That means they will get more passionate about your vision, be more willing to stick with you and be more willing to take ownership of their roles – all because they don’t want to let you down.
Get your management team used to being at the front line too. Disconnect between management and operations is one of the most common reasons for under-performance. And when you’re in a recession, underperformance is not a valid option.
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