One of the most important things you should have when you set up a business is a strategy. A major part of your businesses strategy should be how your business will compete efficiently in the marketplace and remain lucrative even in times of economic uncertainty (Yukl, 2005 pp. 376). Developing a strategy is one of the most important actions a company will engage in.
First your strategy should include clear and focused goals and ground rules for achieving those goals (Develop, 2010). The people working for you should know where the company is going and how it will get there; it is important that the team members and leaders stay informed on company goals and progress. Next, to avoid a downfall in profits it is vital that you have leaders in place that can evaluate the need for a major change in the current strategy and who are able to evaluate the likely outcomes of a new strategy (Yukl, 2005 pp. 377- 380).
It is very essential that as a business owner you hire people who have the company’s goals on the top of their list too (Mercer, 2007). Avoid hiring deficient employees and hire employees who are ready, willing, and able to succeed. The employees you have in place must have excellent leadership abilities and team building skills if your company is going to prosper and maintain in today’s market (2007). Growth in business, revenue, and profitability is the ongoing challenge of any company and in order to arrive at these everyone in your company needs to be a team player (Score, 2007).
Everyone needs to be included and made to feel part of the team. Followers should be able to give their input on projects that they are being held accountable for. Make sure your leaders realize that leadership means responsibility and stewardship and is not just a rank. The atmosphere at your company should encourage energy and spirit. As a business owner you need to be able to evaluate your leaders and followers; you must also be right there with them in the mix as part of the team (2007).
A business owner should consistently monitor the external environment and identify threats and opportunities for their company (Yukl, 2005 pp. 373). In order to grow revenue you need to know what product is in demand and how customers are reacting to your current products (Yukl, 2005 pp. 374 – 376). You may find that it will benefit your company if you develop new products. Try to keep an edge on your competitors by knowing who your primary competitors are and what they are selling, the strategies that are using in their companies, and how their products compare to yours (Yukl, 2005 pp. 374- 376). A small business owner needs to recognize the importance of understanding how to compete in today’s market.
During tough economic times layoffs may be unavoidable and required. However, reductions in the workforce of your company can bring high costs and other unforeseen issues (Judd, 2009). Layoffs have proven to be counterproductive by increasing turnover among the best workers and creating anxiety among the rest – resulting in lower morale and decreased productivity. The loss of talent and leadership during a layoff can be devastating to a company (2009).
There are certain strategies you can take that could postpone or even avoid them (McClune, 2002). Along your payroll front, your company can reduce people’s hours or ask them to take unpaid vacations; most will be able to handle this reduction for a while (Judd, 2009). By offering early-out options to senior employees who are close to retirement and the chance for others to take unpaid leave or change their status to part time you may also limit the amount of layoffs. Trimming benefits such as bonuses and paid holidays could also save you from having to conduct layoffs (Judd, 2009). When people are faced with either losing their job or reducing their income they seem to be understanding and will work with the cut backs (McClune, 2002).
Cutting back on what is known as perks may also help you to avoid layoffs (Judd, 2009). If you provide donuts and coffee let your employees no that they may have to provide for themselves for a while or go without. Inform employees who are reimbursed for toll road, gas, business lunches, or even company cars that in the current economic situation you may no longer offer these amenities.
It is important to maintain communication with your employees if you plan to use cut backs. When employees become anxious and uneasy leaders should take extra efforts to communicate openly. You can alleviate a lot of stress if you include a good cutback plan in your beginning strategy. In troubled economic times it becomes hard to keep your head above the water, but if you have first class leaders and followers you may be able to swim to shore. Also, keep in mind that a major part of your strategy should be how your business will remain lucrative even in times of economic uncertainty.