6 minute read

Strengthening Your Business To Weather the Coming Storm

By Ed Young, Fabricator’s Business Coach

Imagine you are in a 50-foot sailboat, 100 miles from shore, experiencing gale-force winds and 40-foot seas. You haven’t eaten or slept in a few days, and the only other person on the boat with you is seriously injured. How do you prepare to survive in those circumstances?

Obviously, that is a dire situation that few of us will ever face. And, while the current consensus is economic conditions will not be dire over the next two years, we can count on some business challenges to be headed our way. The question is: How do you survive the challenging economy ahead?

A sailor preparing to go to sea will consider many factors related to their voyage.

A sailor has a destination — an objective; there is somewhere they want or need to go. So, what’s your destination for the next two years? What are your objectives?

Is your plan simply to survive?

Survival mode might mean laying off employees to control overhead. It means spending as little as possible and not making any investments. It means taking any business you can get, regardless of the price, just to stay busy.

If you expect to be in survival mode, then it is time to plan for how you will handle decreasing sales volume. Which employees can you most easily do without? At what sales or profit level should you make the first headcount reduction — and the next and the next? What other expenses can you reduce or eliminate?

A typical survival mode strategy would include eliminating organizational memberships, subscriptions and outside services like auto maintenance and accounting. All expenses are reviewed for either elimination or reduction.

Survival mode assumes there are few options for growth and success. Survival mode means focusing only on preserving life — conserving the business at all costs. It’s purely a defensive strategy.

Or is your objective to succeed and grow over the next two years?

Planning for growth during this time of economic uncertainty means you have a strategy to capitalize on the opportunities that will occur — a strategy to increase profitability. It requires strengthening all aspects of the business.

With this mindset, you will have invested in technology that will reduce your reliance on labor while increasing productivity and quality. You have upgraded computer hardware and software for your CAD and front offices. You have a training program in place that includes cross-training on technical skills. You have completed or planned training to improve your managers’ leadership skills so the entire organization’s performance improves.

You have a solid sales and marketing strategy. You have trained your salespeople to qualify prospects and to sell more effectively. You have analyzed your market segments and know which have the most opportunities for you and are the most profitable. You have a marketing plan that identifies which messaging vehicles are most effective for your selected market segments. You understand the shortcomings of your competition and have crafted a clear, unique value proposition that sets you apart.

By planning to succeed and grow during these times, you have decided not to be at the mercy of the economic winds. Like a sailor, you’ll harness those winds in your sails and keep cruising.

A sailor studies the conditions they could face during the voyage; they have a plan to deal with the changing conditions that will occur. When the winds reach a certain speed, they’ll reduce the sail area by a predetermined amount. As the weather changes, they adapt how they manage the boat to take advantage of that change.

Planning for growth during this time of economic uncertainty means you have a strategy to capitalize on the opportunities that will occur — a strategy to increase profitability.

They learn all they can about the characteristics of the destination harbor and all of those along the way. They never know when conditions may force them to pull into a harbor that wasn’t in the plan. Business objectives require similar flexibility.

As a sailor studies weather forecasts, business owners need to check economic forecasts. Owners need a continuous pipeline of economic data. National-level data from financial publications are helpful for understanding long-term trends, as is analysis from groups like ITR Economics. This information should be combined with local and regional data.

Regional economic development organizations and state commerce departments are good starting points. They can give you an understanding of the forces driving your regional economy. What businesses are moving into the area? Do those businesses plan to employ more hourly production laborers or executives and white-collar staff? How will those dynamics impact population growth and housing?

Many shops I talk to aren’t involved in their local homebuilder associations because they haven’t gotten any business from those efforts. However, there is a lot of information available in these groups. While your customers may not be members, other similar companies are. Asking open-ended questions about their plans for the next 12 months, whether they expect an increase or decrease in activity, and how much of a change they expect is all good information to know. Asking your current B2B customers these same questions will help you develop a sense of what will be happening in the next few months.

Keeping this information pipeline flowing is essential to strengthening your business for these challenging times.

A sailor knows the capability of the boat and crew: They know how each will react to various situations. They know the load-carrying capacity of the boat and the speed it is capable of. They know the skill set of the crew members, where there is redundancy and where there is scarcity.

A business owner needs to know their numbers. How fast do you burn cash every day? How profitable were you yesterday? How much profit do you plan to generate next Thursday? Are you on track to hit your profit goals for this month? If not, what is your plan to change that?

Are you the captain of your ship? Do you want to be totally at the mercy of the storm and end up wherever the wind blows, or do you want to be able to navigate the storm toward the destination of your choosing effectively?

Remember, your business is running exactly how you designed it to run. If you want to achieve your goals, you must have good information and a sound plan. You deserve to have a business that makes you money and allows you time to enjoy it. C

Ed Young is the owner of Fabricator’s Business Coach, a consulting firm designed to strengthen and elevate fabrication shops of all sizes. A former shop manager, Ed fully understands the challenges of today’s professionals. He has consulted with a range of businesses, from one-person startups to international Fortune 100 corporations, covering a broad array of products and processes. As a result, Ed knows that each business needs an appropriate structure for its unique situation. To learn more about how Fabricator’s Business Coach can take your shop to the next level, visit www. fabricatorscoach.com or reach Ed directly at Ed@fabricatorscoach.com.

Ed Young is the owner of Fabricator’s Business Coach, a consulting firm designed to strengthen and elevate fabrication shops of all sizes. A former shop manager, Ed fully understands the challenges of today’s professionals. He has consulted with a range of businesses, from one-person startups to international Fortune 100 corporations, covering a broad array of products and processes. As a result, Ed knows that each business needs an appropriate structure for its unique situation. To learn more about how Fabricator’s Business Coach can take your shop to the next level, visit www. fabricatorscoach.com or reach Ed directly at Ed@fabricatorscoach.com.