Business stagnation. It’s a dilemma that faces most companies at some point in their life-cycle and its one of the main challenges that I am asked to deal with as a business management consultant.
Market dynamics are always evolving, customer tastes change and hungry competitors are always trying new ideas and tactics to win market share for themselves. If your sales start to dry up and action is not taken quickly then your financial health goes downhill and the business ends up flatlining.
It may be time to take stock and examine the underlying issues and root causes of poor business performance to be certain you will be directing your resources at a long-lasting cure.
If your business is struggling, here is my playbook of 6 strategies to help get your organisation back into good health:
Lead From The Front
There are many early warning signs that could reflect vulnerability in the business, other than the revenue and profitability trends. For example, poor cashflow, increasing cost overheads, market share slide, customer churn and employee retention difficulties.
Leaders need to be vigilant and act quickly at any sign of downward performance. Better still, pro-active communication with all levels of the organisation, as well as with customers, can help a leader to identify areas of concern before they become more serious.
When warning signs are there, time is of the essence and leaders must take accountability and act. A quick fix may be needed, but a longer-term business transformation should be confronted if the organisation is suffering poor efficiency.
It may be necessary to create a task-force team to uncover root causes for business stagnation and identify remedies. A business management consultant will be a valuable resource when the appropriate expertise is not available internally.
Overhauling systems or processes can optimise efficiency, reduce costs and enhance customer service capability. Integrating technology or new business methods may not only improve internal performance but can also differentiate a business in the marketplace.
Energise The Team
When a business is under-performing, personnel become worried and insecure. This negativity quickly permeates through an organisation affecting the working environment and corporate culture, further exacerbating the problem.
The influence of corporate culture on business performance cannot be overestimated.
If the workforce is demotivated, even a strong tailwind of favourable business and market conditions may still leave a company facing slow or no growth.
Every business wants inspiring employees who go the extra mile to get results and feel empowered to work with less supervision. Energising the workforce to is not as difficult as some think, and its not all about providing free food and great bonuses!
An organisation with leaders who empower and nurture their employees while demonstrating empathy towards them will create a powerful motivational environment in the workplace. Think about a how a strong family unit works, encouragement and trust are vital components.
Promoting a clear vision and linking their performance goals with overall strategic objectives will give employees pride in how their roles and achievements contribute to results.
Set The Strategy
A plan that involves working longer hours while cutting costs is not necessarily a recipe for returning to profitable growth, yet it’s the default position for many struggling businesses.
Instead, its time to get a grip on the business and revise the playbook in order to drive the organisation forward effectively with everyone on-board.
The business strategy needs to be re-visited and course corrections need to be made. If there is no strategic plan in place whatsoever then it’s probably not surprising the organisation is vulnerable to changing business conditions.
In this case, developing a plan is a priority. At the very least an interim strategic framework should be implemented.
Strategic planning is a team game. Key employees and teams need to be part of its development, customer feedback is vital and supply chains may also need to be involved. This widespread involvement in the process will help motivation and smooth the change management implementation.
Rationalise Portfolio And Target Core Strengths
As the old saying goes ‘you cannot be all things to all people’, but for some reason many companies fall over themselves trying to do just this.
If not managed carefully, product lines and service offerings can expand unnecessarily, and before long the portfolio is bloated which creates confusion for both employees and customers alike.
This distracts from the original core business idea and adds costs in the management of additional inventory, assets and personnel. A rationalised product/service offering with a narrower focus will be better differentiated in the market and may get the business back to actually doing what it does best.
A stronger competitive advantage can also get you out of the ‘lowest cost wins’ battles and move you towards a price premium for your offering. When customers appreciate the value benefits over your competitors, they become loyal to your brand and are more likely to advocate for it.
Differentiating your business will help you stand out from your competitors, but that will only translate to success if you are appealing to the right customer profile.
Laser Focus On The Right Customers
The temptation to say yes to every opportunity can be hard to resist, especially if your business is flatlining. Some sales prospects may just not have any hope of a reasonable level of profitability, and servicing some customers may not be worthwhile because of the sheer effort and resources required to secure the work.
It is important to identify a target market segment with these 3 criteria;
- A group of customers who have an urgent need and the funds to pay for a solution
- Customers with ‘pain-points’ that are not being fully addressed by competitors
- The customers’ desired solution is within your strategic focus and your core capabilities
By using separate marketing and sale strategies that target just your segmented customers, there will be no danger of confusing them with offerings that do not serve their needs. Digital marketing and traditional marketing tactics can be used more cost-effectively with this segmentation strategy.
Companies often squander the potential value of their best customers, the top 20% who could be the strongest advocates for the business. Communicating with these customers regularly will ensure that their value expectations are met while opening up opportunities to up-sell and repeat sell.
In some cases, businesses do not even realise that the reason their growth rate is low is because their customer churn is higher than new customers acquisition rate. Refocusing sales and marketing efforts on customer retention is also usually cheaper than lead acquisition and conversion.
Set Pricing At The Right Level
Sometimes you have to lower your prices to get business that will bring strategic benefits – penetrating a new market or establishing a new product offering for example. This should be part of your marketing strategy and just a short-term measure only until your customers recognise your value proposition.
Unless you can up-sell added-value offerings, taking the decision to routinely lower all your pricing against your competition will just be a ‘race to the bottom’. You will have no chance to grow which ultimately spells doom for your business.
If you have established a strong differentiating value proposition that is targeted to a group of interested customers with money to spend, then your pricing must reflect this competitive advantage.
This strategic focus on offering the right products or services to the right markets allows you to sustain your profitable growth.
Profitability gives you the freedom to reinvest in your business to ensure you can continue exploiting the right opportunities as well as satisfying your expanding customer base.
So in summary, if your business is struggling to grow and threatening to flatline, this is your check list of actions:
- Show leadership, act quickly by getting the right people around you to lead change, look for opportunities to drive efficiency instead of focusing on just cutting costs
- Energise the team by communicating regularly through the organisation, empowering and involving them in the change management and goal setting process
- Revise the strategic plan, or put a strategic framework in place urgently and embed it into the organisation as a dynamic playbook to drive business growth
- Rationalise the product/service lines to get back to core business and offering a differentiated value proposition
- Obsessively focus on target customers, especially the top 20%, and provide them with exceptional end-to-end customer experience and identify ways to add more value
- Set pricing at a level that represents the value proposition on offer, continue testing the level to find gains where possible
Let me know your experiences!
I’m a Business Consultant with over 30 years of international experience in start-ups and senior leadership positions in multinationals and Fortune 500 companies. I provide expertise to develop value-driven solutions in Business Growth, Marketing, International Sales, Strategic Planning and Business Transformation.