America's Best Business Practices

Hard times are the best time to innovate. It’s refreshing to see you put that on the list because most companies will completely get rid of any R&D during a downturn.

Jarie, I agree with you. It seams to me that innovation is key to differentiating one company from another during good or bad times. Those that innovate in bad times will be far ahead of competitors when the economy rebounds.

Mike, great tips easily over looked in the “heat of battle”. Also in hard times companies unfortunately slash marketing costs down to the bone just when they need to be visible the most.

Great list Mike.

I would like to add that improving financial reporting isn’t just about looking at the information more often. Afterall, if I weigh myself 6 times a day I’m not going to improve my weight loss efforts.

Business owners need to make sure that they are measuring the right things, and looking at that information in a user friendly format.

Thanks for your comment Brenda. And of course, you are spot on! I did blog about financial reporting… creating a “Key Factors Report” in a recent article, “Managing by Rule of Thumb.”

Thanks Mike. All of the tips are right on target. I have decided to close my “brick and mortar” store and market exclusively online. This not only gives me freedom of movement, but a greater opportunity to focus on marketing worldwide.

Congratulations Mamie on making bold decisions with your business, and recognizing that uncertain economic times create great opportunities for new products, services and innovation.

Am curious about the “treating your employees better” section – while I’m working hard to keep from laying my employees off, how can I ensure I’m not making them feel like I’m “doing them a favor”? Of course, I don’t feel that way at all – but your comment made me pause and worry a bit!

On the converse side – I wonder what your experience is if it comes down to laying an employee off… when times turn back up – will they already resent me if I call them to ask them to come back?

April, every case is different depending on they type of employees you have, the number of employees, how many you may have to lay off as well as many other factors. Therefore I can give you only a general response without knowing a lot more about your situation.

If it were me and my style of management, the first thing I would do is “set the stage”. I would do this by letting them know that business is down and that lay offs are possible. I would explain that layoffs will be our last course of action. Our first course of action is to increase business and revenue so there will be no need for layoffs. And if all of us put our heads together, I believe we can come up with ideas to accomplish this.

I suspect there are things in every department and that every employee can do to improve something they do to increase customer loyalty, secure additional business from existing customers, convince customers that have left to come back, and secure some referrals for new business. I would guess that if every employee made this a priority, you could at worse, increase business to the point that no one would need to be laid off. I have written many articles on what you can do to increase sales rather than cutting back. You can find these articles by checking the “archives” by month (in the sidebar). A couple articles I would point out are, “How to Improve Cash Flow in Ninety Days” and “Strategic Small Business Plan for 2010“. There are several other articles as well that should help you with your situation.

Once I had set the stage, I would look for opportunities to reward the employees for good ideas and for implementing them in a way that contributed positively to the company. Maybe it is pizza for lunch or a day off. There are dozens of things you can do to reward employees (without a lot of expense) that will endear them to you and make your company a fun place to work. People who enjoy their work are far more productive than those who do not.

If all efforts fail and employees must be laid off, I would then do it in the most positive manner possible. “This is not your fault. You can not control the economy. It breaks my heart to have to do this, but if I don’t and we end up closing the company as a result, I will not be able to bring anyone back when the economy improves. You are a valuable employee and I want you back as soon as we can improve business enough to be able to afford it.” If you handle it properly they will come back. My experience in small companies has been that the employees really work for their boss rather than their company. If they love their boss they will love their work. If they don’t, they will hate their job no matter how great the company might be. This is not necessarily true in a larger company.

April, I hope this is helpful. Possibly others have some thoughts they will share with you as well. Good luck!

Thank you, Mr. Clough – this is very helpful!

With your further clarification, I’m not quite as worried as I was at first! I believe I am generally following the path you describe. However, I worried that I might be in the category of making them feel like I was just doing them a favor, based off of the brief statement in the article.

I have brought them to the table and described the situation, and am encouraging them to assist with developing opportunities. I will enjoy reading the additional articles you mention and share them with the team.

I do miss the days where we could generally “turn over a few stones” and readily fill in the gaps if/when we had them!

I am hopeful that our small team can become good at “digging up some stones, so we can turn them over”- at least that is what it feels like these days!

Thank you, again, for your guidance and suggestions…I am sure I will be returning to your pages/articles often!

April, I would also recommend that you read, “Why Many Small Businesses are Still Struggling“. It deals with “learning to dance in the rain rather than waiting out the storm.” I hope you find it useful.

Good luck, April.

April – Mike is so right.

Communication Communication Communication

Before reducing your staff, be sure to consult with an HR specialist or employment attorney. Depending on how you phrase the termination you may or may not be giving your employee rights you intend them to have regarding returning to your company when things get better.

An excellent list. But, if I may, I would add another valuable tip that, in my experience, is critical to successfully navigating through the financial shoals of uncertain profits, tight credit, restricted budgets and reduced cash flows.

Bonus Tip #11: Focus Resources

Companies should rethink their allocation of resources, human and financial, as well as the focus of their investments in R&D and manufacturing technology. These all should be directed to a limited number of key products that are essential to maintaining leadership positions in core markets. Instead of a broad-based marketing budget, a diluted capital plan and shot-gun product development, company leaders should keep their organization narrowly focused on guarding the keys to success: leadership products, key customers in growing segments, differential advantages.

One important note: Focusing does not necessarily imply cutting back; it does imply cutting out spending and effort in secondary and tertiary areas that will, ultimately, not determine an organization’s ability to survive or thrive in a tough economic and competitive environment or drive the company forward.

I would add at least one more tip which is join your industry trade associations like Life Science Alley for Medical Devices in Minnesota. They are great places for education and networking.

Using a term Microsoft invented called “Coopetition”… meaning sometimes your competitor becomes a business partner. Trade groups are a good place to build relationships even with today’s competitor that may be tomorrow’s partner.