5 tips to prepare your company for the downturn: Sonia Michaca, Regional Manager at Tribal
The global economic downturn is imminent. We know that it is hard to admit it, because talking about the crisis has become a constant in practically every aspect of our lives: from the desk at the office to the dinner table at home.
In the business context, it is no different, as the crisis is forcing all companies to chart a new course. Its magnitude and long-term effects are something we cannot decipher until we get to the other side.
In the face of the crisis, the first impact that companies receive is a blow to their means of financing, because the first precautionary measure taken by traditional banks in these scenarios is to "turn off the tap" on credit.
This, in developing countries, is detrimental to their chances of overcoming economic adversity. Even more so if one takes into account that there is a $5.2 trillion annual shortfall in financing needs, according to the International Finance Corporation.
The key question, then, is how we can acquire the tools that can help us get ahead. As we enter the last quarter of the year, the opportunity to address the issue is unparalleled.
Ensuring business sustainability
First things first: we must assess the level of liquidity of our company. To do this, we must focus on the revenues we are generating, as well as identify the product and business lines that are helping us to be profitable.
In this sense, we must look at what our competitors are doing. This not only helps us to stimulate creativity but also encourages us to generate new initiatives that strengthen the differentiators of each company.
This moment we are going through is extremely important because it gives us the opportunity to rethink the strategy we are implementing: what are we doing well and not so well, how can we add value to our customers, and how can we add value to our clients?
Finally, we have to align the strategy - both externally and internally - to ensure that in the future we will be able to keep growing with a sustainable model.
Turn on the antennas
In this type of scenario, we are often overwhelmed by the amount of information. Everywhere we go, we receive information, data, and opinions - sometimes even mixed ones. However, we must never stop paying attention to the most important voice: that of our customers.
Understanding their needs, urgencies, and concerns is the only way to decipher how you can help them. This is a huge opportunity for companies, as active listening to customer feedback is the first way to strengthen your offering.
In-house, it's equally important to listen to your team. The level of detail they have about the different business units will be critical to making important decisions.
Now, this is not to say that we close the windows and stop listening to what's going on outside. It is curious, but thanks to the concerns generated by the current context of uncertainty, many of us share concerns, so there are plenty of reasons to get together to discuss, exchange and connect with our peers.
Taking this route, in principle, strengthens the entire ecosystem.
Offering a solution to the market has its intricacies, of course. However, in today's world, the sheer number of solutions available can mean a mess for businesses: how do I choose the one that best fits my needs?
No one in business would argue the importance of having differentiators, but in this day and age, it is paramount to communicate these differentiators to your potential customers clearly and honestly.
This is not only with a commercial interest, but with the genuine intention of making it easier for them to make the decision to collaborate with you or with another proposal.
Analyzing the behavior of our current customers is always a great starting point: where they spend, what add-ons they need for the product, and how they use the product. All of the above according to the stage of growth they are in.
Thus, the differentiators of your offer are not only sales arguments, but a way of communicating with your potential customers.
Having products tailored to your company's needs
In contrast to the above, we find that companies must analyze the products and services they currently have and decide whether they are actually adding value to the organization.
Faced with the challenges that the future holds, a conscious capital allocation strategy requires real-time expense control and traceability for each of them.
In our experience, we have found that, for some companies, it is not enough to have access to a traditional line of credit, such as those usually offered by banks. Added value is needed to support longer-term objectives, such as the digital transformation of medium-sized companies and the generation of reliable data.
Having this type of tools to better plan payments or accounts receivable is relevant because they will have the right support to avoid wasting time, thanks to the fact that they will be able to identify which payment strategy is more convenient in each case.
En contrapunto con lo anterior, encontramos que las empresas deben analizar los productos y servicios con los que actualmente cuentan y decidir si en realidad están aportando valor a la organización.
The best-case scenario
Recognizing that a complex season is coming is the first thing we must do to be prepared. As part of this planning, it is worth thinking about the best possible scenarios: what parameters will I consider to evaluate whether my company has come out ahead during the crisis?
In other words: how am I going to measure the success of my company in a crisis scenario?
In terms of specific data, there is no doubt that cases vary as much as there are companies in the world. Each has its own particular goals.
However, speaking in general terms, coming out of this crisis with a proper identification of the key products and the margins expected from each one is a goal to which we can aspire without being overly optimistic.
This is one of the paradoxical "benefits" of crises: you begin to focus your products on increasingly well-defined segments. As soon as you can pinpoint precisely how your product fits into a sector or industry, your offer becomes more closely aligned with the needs of the market.
In short, competitive prices for consumers and a solid product for companies is, generally speaking, a good post-crisis scenario.
Thus, taking the crisis as an opportunity to create a sustainable model over time is an achievable goal for companies.