Running a business sounds easy, in theory. Find a product or service, take it to market, find clients, sell it, and create shareholder value. This value can be seen in increased profits, market share, or business growth. If you are a manager or business owner, this value is created through organizational goals by implementing a sound strategy.
A well-communicated strategic focus, utilizing the business’ strengths, helps ensure that all resources are employed efficiently, positively impacting any business. But history has taught us, theory is a lot easier than practice. The rise and fall of company giants show how a missed opportunity or a change in market can lead to massive failure.
If it is difficult in good times…. what happens when markets are down, and all signs are indicating a recession? Businesses normally reduce capacity, employees are retrenched, and cost-cutting is the order of the day, at least until the economy takes a more positive turn.
So, the question is always: should businesses change their strategy and implement drastic changes?Â
Organizations must realize that tough times will increase the rate of failures of ineffective business models and strategies. In addition, consumer spending and the government’s response to a recession change how business will be done. There is a long-lasting impact after a recession has run its course. In this environment, if a company does not react to the changes imposed, it could result in real risks for the business. A business needs to focus on short-term survival but consider long-term sustainability.
Rather than changing strategies, focus and consistency is key and the following practices should be borne in mind:
- Each organization should treat its strategy as a living document that can be changed when and as necessary
- Organizations should utilize strategy theories and tools to help strengthen their business models and strategies
- Organizations need to ensure that they correctly define their strategy and do not confuse it with operational effectiveness
- Organizations need a robust business model and strategy that differentiates them from the competition and has the correct focus
- Understanding the competitive environment in which an organization operates and the impact of these competitors on the industry cannot be underestimated
- Innovation is all about creative ways of thinking to establish uniqueness. It is core to any company’s success
- A skills mix is essential for achieving success
- Cost control cannot be ignored. Organizations need to look at functioning more efficiently and effectively regarding costs during recession and non-recession periods
- The ability to gather accurate and relevant data is core to ensuring fast and informed decisions. Automation is key in this area
- Building relationships with clients and understanding their business is the new method of client interaction.
By staying consistent with a well-defined strategy, utilizing the right tools and skills, controlling costs, and innovating creatively, businesses can build resilience and differentiate themselves from their competitors. Additionally, businesses must stay agile and adapt to changing market conditions by gathering relevant data and building solid relationships with their clients.
Ultimately, running a business is not an easy task, and it requires constant adaptation and refinement of strategies to remain competitive in a dynamic market environment. While it may be tempting to make drastic changes during tough times, it is important to focus on business basics while bearing long-term sustainability in mind.
