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The smart get thinking

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As the old saying goes - when the going gets tough, the tough get going - but the smart get thinking and that has to be the best response for business owners trying to combat the economic downturn that looks to be turning into a recession.

A largely unexpected fall in economic growth in the December quarter has dashed the chances of Australia just dodging an official recession. The hope was that the December quarter would be barely positive, the March quarter would be negative for sure and by the June quarter the combined hit of the $42 billion stimulus package and the four per cent cut in interest rates might have turned the economy slightly positive.

The official definition of recession - six months of negative growth - still hasn’t happened but media outlets are running hard with the “Recession” headlines and so that is bound to hinder both consumer and business confidence. That was the prime reason I was hoping we would only have one quarter of negative growth so we could leverage off a possible “No Recession” headline.

This was not outrageously optimistic thinking as the February NAB business survey has shown that business confidence, while still negative, improved substantially over the month.

However, if business owners must deal with the added weight of recession talk everywhere we go, the best response is to fight negativity with realistic positiveness.

Every business has to pull out the greatest marketing effort imaginable and it has to be done at effective cost. Some companies take risks and actually increase their marketing spend but that takes courage and great cash flow.

Others recognise that through good times when revenue came flooding through the front door, there was insufficient lateral thinking or outside the square strategising going on.

I have mentioned this before but Edward de Bono says the great business competitors are also great lateral thinkers. This is the time to get all of your team together and get them thinking about ways to both increase sales and drive down costs.

Michael Eisner, the former boss of Disney used to have weekend brainstorming sessions, which included people from all parts of the business. Marketing executives got together with ticket collectors to see what innovations were possible. Eisner believed the guy on the amusement rides often knew stuff about Disney customers that executives, armed with their folders of marketing research, didn’t.

Lots of businesses forget 80 per cent of business is often generated from 20 per cent of their customer base. These great customers should be targeted in these tough times. Thinking about your customers’ needs is the best way to come up with moneymaking innovation.

This is also the time to look at your costs, line by line, and see if you have accepted bills from suppliers that were struck when everyone was busy and revenue flowed freely.

Your staff should be included in your cost reduction drive as they could be the ones that go for high priced, immediate courier services for packages or documents that possibly don’t need to be sent urgently.

This is the time for innovation and leadership - both go hand in hand. It is the testing material of leaders and their teams and creating a oneness in your assault on the recession threat could create a much better business which will shift into the fast lane when the economy improves.

Recently, I came across a UK restaurant, which took on the recession there by creating an all-you-can-eat deal provided you pay five pounds for alcohol. It has worked a treat and he has even attracted television stories, such that a business commentator in Australia is talking about his business.

Published on: Saturday, March 28, 2009

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