Sometimes companies, just like people, hit a slump. It can be tough to overcome, but these five steps will get your profits turning again. These are the essential factors for getting your growth back on track.
When you notice that growth has slowed down and profits aren’t what they used to be, assess your finances first. Are you making the best use of your funds? Are your priorities out of order? Sometimes you may need to forgo promising opportunities for the sake of preserving your core business.
A company must never be without essential funding. Control your working capital tightly to maximize your free cash flow. Manage your credit, settle overdue debts, and raise some financing against any trade debts.
For companies that are already established and focusing on growth, supplier management and stock control are critical. Optimize delivery cycles and make sure to periodically clear out any obsolete stock. Also, consider recruiting outside investors to facilitate further expansion.
There is a good reason why so many books and seminars urge you to “remember your why”. If things are slowing down, or sliding backward, take a step back and review your ultimate reason for being in operation.
What are you hoping to accomplish? What do you want to contribute to? This is known as the purpose led transformation approach, and it’s increasingly dominating the business world. A clearly defined purpose gives momentum and focus to your business efforts. It’s the driving force behind your organizational structure, growth policies, and employee management.
Your corporate purpose is the uniting summary of who you are, what you stand for, and why you do what you do. It encompasses your goals, values, culture, and behaviors. So if your company has hit a slump, look to those essential pillars and use them to develop a proactive, purposeful comeback strategy.
If you can’t efficiently collect, store, sort, process, and utilize the massive amounts of information that your business needs, you will suffer suboptimal profits, reduced productivity, stunted growth, and overall poor metrics.
Your business data includes information that the company itself generates, as well as outside input that it relies on for operation:
Invest in a solid information system to help you manage all that. Implement a robust infrastructure that enables fast processing, secure storage, and easy sharing. Your system should also facilitate quality control. This motivates improvement and demonstrates your reliability to larger clients.
Flexibility is potentially your biggest challenge because it’s ongoing. You have to continually review your business plan to keep up with the changing market. Sometimes this means tough decisions, like redundancies or cutting ties with favorite suppliers.
Sticking to previous practices because they were previously successful will put your company at a disadvantage. You must be willing to leave your comfort zone and change the way you approach things such as:
Finally, you must always think ahead. Your strategy and operations have to evolve at the same pace at which the market changes, and they have to be flexible enough that you can adapt them to unexpected circumstances.
On the one hand, you continually have to balance between maintaining existing relationships and winning new customers and business partners. On the other hand, you have to weigh between pursuing attractive new opportunities, forgoing them for the sake of stability, or even ending longtime contracts which no longer serve your ultimate purpose.
To make it easier, invest resources into your foundations: people, policies, and tech. Give your employees opportunities to skill up. Educate your management and leadership on the current social issues. Handling them properly boosts your reputation, wins loyalty, and improves customer retention. Invest in robust tech that you can update, rather than frequently replace.
In summary, your profit and growth rate depends on your motivation and planning. Have a clear corporate purpose that will drive you through challenging times. Manage your finances and data strategically. Be flexible in your practices, and continually adapt for the future.