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Note from Donna…Buenos dias! I’m in beautiful Puerto Vallarta on my lonnng awaited honeymoon. I know… I know.. it’s been four years. We had planned it for May 2020…and we all know what got in the way of us going. Right now, I’m on a beach with a drink in my hand and enjoying the company of my husband. Nope…not thinking about ya … but I will when I get back.
I did think about you as I front loaded some of my work including this newsletter, so let’s get back to our discussion on the 5 phases of a recession.
To remind you all what the 5 phases are:
1. Shock
2. Desperation
3. Evaluation
4. Deliberate Action
5. Surge/Burst
We talked abut Shock and Desperation last time – go back to my blog if you need a refresher – www.sooterconsulting.com click on the blog tab.
Evaluation – This is where you are putting a lot of thought into your top 20% of clients and what products and services they are using. What is working? What is not working? We all have products/services that are not as profitable as others. It’s time to trim down our offerings – get rid of things that are bringing down your margins.
While you are doing all that thinking, I want to bring to your mind a few words for thought.
1. There is a difference between growing your business and scaling your business. Growing is do more – to get more. Scaling is do less to get more.
2. How can you double your revenue at ½ the cost? I know it may seem like a big ask here, but are you really as efficient as you can be?
Historically, businesses that focus on Scaling during a recession do better than businesses that focus on growth.
3. As counter intuitive as it seems, you may need to increase your prices. I’m sure you’ve felt inflation rise; you may not have a choice as your vendors increase their prices. It can be scary, but it can make the difference in weathering this storm.
4. Consider a Shrink flation method. Best example is food products. You ever experience a bag of chips that looks the same on the outside and cost relatively the same as before, but when you open it…there’s less chips. Yep – Shrink flation is at work.
I hear you … "but I am a service industry how can I apply shrink flation to my services?"
Here’s one idea I am toying with. Offering a package to my clients that is relatively close to my current price but take out the one-to-one meeting with them. To continue giving value and keep up what I’m known for, I offer group office hours to those clients. I have a coach that does this right now to me – I use the office hours often and many times I’m the only one on the Zoom.
Hope that get’s the juices flowing in your mind of what you can do to change up, lower costs and still give value.
Suzy Welch gives us the 10 10 10 Method of evaluating our thoughts (google it if you are not familiar – it’s a fascinating method.) It reminded me of a Pro/Con list.
Basic idea – is to evaluate if I did this how would it serve the business in 10 minutes, 10 months and 10 years. Sometimes we get ideas to improve cash flow RIGHT NOW, but it’s not going to serve the company well in the next 10 months or years. Evaluating decision especially when it relates to money requires us to take a step back and consider how this will affect us later. We also may need to decide that the instant cash flow is necessary to stay afloat. Bottom line – Think before you leap. You don’t want to leap into a sinking boat. If you are unsure, you can always do a “test”. Just make the change for a small amount of time or items. See how it affects the business.
Next time we I will go over the last 2 phases. It’s exciting stuff because we get to act on the thoughts we’ve come up with here and position ourselves on the right side of supply and demand.