Personal Finance | Interview Answers | Winning CVs | Beat the Recession

How to survive the recession. Taking tough decisions

What's vital for all of us? The ability to make tough decisions and decide - rapidly - which ones to make. Never before has there been so much different advice available to you. There's no time to lose.

WHAT DO YOU NEED TO DECIDE?

You need to make decisions and inevitably some of them will be tough. These might include decisions on: product lines which are losing you money, people who are not productive, customers who are difficult to work with, premises which are too expensive or which sector to give your resources to. No matter how tough these decisions are you must make them today. Here's how.

1. Scale up your decision making

Make decisions more quickly, more often and with a careful balance of short- and long-term consequences. Get a clear handle on your decision criteria: revenue, profit, market share, and so on. Business battles in recessionary times are won or lost by the ability to make clear decisions under pressure with insufficient data, and to be able to live with the consequences of those decisions with no early sign of success. In other words, you need to have courage under fire. If you are confident that one part of your product line could take a price increase which would more than cover the reductions which are essential on other parts of the line, do it. There may be initial customer push back, but do it. The eventual profitability will be glorious - but it won't happen unless you can make tough decisions.

2. Balance now and the future

The angst of this tough time in the economy will pull you into fight-or- flight thinking. Balance that evolutionary pull with some good leadership. Ensure that every short-term decision you make also takes account of the long-term impact. Many an organisation has laid off good people only to need to start recruiting them again in three months' time, at great expense and training cost, often without being able to replace some of the rising stars they lost. Be clear: any bold short-term decision (well done!) has a more subtle long-term impact. Think it through - you'll soon get really good at it. Your competitors are deciding for now and now only. This could be one of the many edges you develop over the competition.

3. Make good tough decisions by taking time out

The ability to work very long days is both admirable and necessary in the coming months, but it's not so good for your greatest asset, the one which is really going to get you through this time: your brain. Look after it - give it a break. Go home early and watch a film. Take a walk in the park at lunchtime. Go to bed with a great novel. Start swimming. Start walking more. Brainstorm with your partner (in business, in life or in both). Buy a different marketing book and scan for ideas. Take your notebook to the cafe. Work hard, yes, but work smart, too. Sometimes you can do less and achieve more.

4. Make tough decisions on revenue and profit

Where will your revenue and profit really come from over the next nine to eighteen months? Draw up a matrix: products and/or services along the horizontal axis, customers and/or markets on the vertical. At the intersections start doing calculations. Get explicit. Sum rows and columns: where will the money come from? Is that money profitable money? As a consequence of your analysis make tough decisions on where you will spend your marketing budget, which markets/customers you will chase and which markets/customers you will let go. Get tough.

5. Combine the best of logic with the best of intuition

Make good tough decisions by using balance sheets plus heart and guts. You're going to be making a lot of tough decisions over the coming months. What's your methodology; your process? Consider this:

Stage 1 Get the facts ('We make no money on that product range').
Stage 2 What are your decision criteria ('Do we need a presence in that market')?
Stage 3 Draw up a balance sheet (pros and cons) and draw a conclusion.
Stage 4 Does the decision align with your gut feeling? If so implement it. If not be suspicious and review the data again.

6. Make tough decisions about people

When you look at your prioritised cost spreadsheet, people will keep coming out on the top of that list. You'll need to make some tough decisions. The key questions to ask are, Is it simply their cost that stops me wanting to keep them? If it is performance too, can anything be done about that? If it is simply cost can anything be done - with their agreement - to moderate the cost for a short period? People who enjoy their jobs will want to keep them even if it requires some temporary hardship. If you have to let people go, do your utmost to maintain the relationships and to help them find new positions. Talk to your solicitor and gain ten minutes of advice on the procedure for redundancy; you don't want to be distracted by having fired someone in a way which breaks the law.

7. Make good tough decisions by talking to others

Talk to your network. Ask your contacts what they would do, and return the favour by helping them out. Tough decisions are harder to make on your own. A third party's insight, especially from somebody who is not emotionally involved, can be invaluable.

8. Make tough decisions about your previous vanity, ego, foibles and history

This is a great time to break some patterns and silly practices. Some things are just that way because they always have been, but that attitude needs to be challenged as that is where a lot of cost is potentially hidden. Why are there two sites for the business, with the travel expenses and inevitable miscommunication this entails? Why are you paying over the odds for office space just to have a prestigious address? Why are there so many grades of company car? Has anyone ever validated the huge standing order that goes to the accountants? Why are certain people based at home?

9. Make tough decisions throughout the business

This means everything - from major strategies to seemingly less significant items: pay reviews; bonuses; expenses; holidays; capital investment; which customers you should develop and which you need to let go; which suppliers you develop and which you switch; what you do about funding; how you should approach the bank; what you want your accountant to prepare for you; what you will say at the company annual meeting; how you will demonstrate that your attitude is 'we're in this together' not 'it's us and them'. Create a checklist on your whiteboard of tough decisions to be made. Start working through it.

10. A tough decision is not a decision until it is turned into an action

So you've decided to do more telephone cold calling? Excellent idea - so what's the action? Does a dedicated quiet room need to be set up? Is a list of names needed? Is a guideline pitch needed? Who's going to do those things, and when? Make a decision: take an immediate action. That's real, tough decision making.


Custom Search