You already know success requires hard work. In fact, it is hard work on the right things. Based on what successful businesses have done, let me explain what these right things are.

In Part 1 I started with CASH.

In Part 2 I talked about KNOWING YOUR GOOD COSTS FROM YOUR BAD COSTS.

In Part 3 I discussed the power of pricing: STOP UNDER-PRICING!

In Part 4 I exhorted you to STOP SMALL AMBITIONS!

Now I encourage you to ACT – BUT PLAN FIRST!

Let me be a bit simplistic for a moment and divide the businesses that have come through the downturn into two types: “Pros” and “Wing-its”.

The “Pros” types of businesses actually learned to like the downturn! They did not get frightened, but focused; not anxious but active.

“Pros” realised that when ‘up against it’, there are opportunities to make changes that would be much more difficult at other times.

Perhaps they have long wanted to restructure the business. So they did so.

Perhaps there are inefficiencies they had always meant to tackle; narrow thinking that they had always wanted to free their people from. So they acted.

They took opportunities to deepen relationships – not just with customers but with their suppliers as well. They made a point of being a good customer: does it really matter if your supplier takes 20 seconds to answer the phone instead of 10 (saving cost), if the person you speak to is helpful in every way? Some waiting times matter less than others: 30 seconds sounds too long; and deliveries must keep to promises (so they told their supplier what is important to them!).

“Pros” realised that the key virtues of flexibility in the balance sheet, in operations and in their product/service offering, if acquired and embedded during the difficult times, will pay metaphorical and literal dividends during the future upturn.

Indeed, quite a few “Pros” took opportunities to acquire assets at bargain prices – even whole businesses. They successfully fought the instinct just to protect their business’ balance sheet and earnings, and this opened their eyes to prospects to absorb weaker competitors and grow their own business even when so many rivals were contracting.

This was not about going on a spending spree but making acquisitions that have strategic sense.

How did “Pros” do all this?

At the very least, they all had a PLAN.

For example, distinguishing opportunities to buy useful assets from spending-traps demands that you have a strategic plan. Intelligent, counter-cyclical investment can separate winners from also-rans and has-beens.

“Pros” will now reap the benefit of their good work through the downturn in the same way as they pursued such good work in the first place. They will prosper through the good times in the same way as they did during the bad times. THEY WILL PLAN FOR IT!

What about “Wing-it” businesses?

They muddled through and fickle fortune favoured them. They said they were far too busy fire-fighting to save the business to be able to luxuriate in some nebulous strategic thinking or planning.

And now, with the worst over, what need of it when they did OK during the tough times, right?

WRONG!

When times are presenting opportunities and there are genuine prospects for growth, your business is too important just to ‘wing it’. Such times demand more from you than just a string of seat-of-the-pants decisions.

No one really knows whether the upturn will last or whether the economy will succumb to a ‘double-dip’, but it is no good flapping about in the fog. What is needed is an overall sense of direction combined with flexibility.

The survivors – and winners – will be those businesses that make thoughtful choices, have a sense of the strategic possibilities of their market, and understand the strategic capabilities needed to exploit them.

Such understanding will then guide specific actions: what should be done to preserve cashflow? (Increase capacity or say ‘no’ to an order?) What are the good costs and the bad costs in the business? (What are extraneous activities and what is feeding relevant strategic capabilities?) What levers can be pulled to increase income? (Can prices be raised or the number of customers or the volume if sales?). But which is which? This can only be answered in the context of a STRATEGIC PLAN.

For “Pros” and especially for “Wing-its”, It is too easy, in the heat of day-to-day battle, to look at only what is immediately in front of you. Winners will consider a broad range of options and be open to new possibilities.

Resources are scarce and their deployment cannot be based on priorities that reflect the last issue that you confronted.

Cut costs? Ok, but not to damage long-term competitiveness or customer service? Raise prices? Ok, but not so as to see all your customers melt away. Re-trench and focus? Ok, but not so as to overlook new opportunities. Love your customers? Ok, but not so as to withhold cross-sales from them and to take all the ‘sur-costs’ (eg fuel, ‘green’, etc) yourself without sharing them. Cancel that investment in IT? Ok, but not so as to emasculate strategic capabilities that will be crucial in the long term.

If your business is one of the “Pros”, you survived the downturn because you planned to survive. A “Wing-it” business was just plain lucky. Fortune’s smile can very easily turn to a frown and every business deserves to hold their future in their hands, not in Fate’s.

The “Pros” business will win in the good times as they did in the tough times, they will PLAN.

If your business looks in the mirror and sees too much of the “Wing-it” about it, then take control and PLAN.

The winners will be those businesses that make thoughtful choices, have a sense of the strategic possibilities of their market, and understand the strategic capabilities needed to exploit them.

Never has strategic thinking combined with flexibility combined with constant attention been more important.

Thinking strategically is about asking: ‘what would have to be true to make the proposed action successful?’
For example, suppose you are considering cutting your customer service team in order to save costs. For this to succeed, you would have to believe that few customers would seek alternative providers at a time when your competitors would be desperate to have them. Is that plausible?

On the other hand, cutting stationery, travel and accommodation costs, but diverting the savings to spend more on customer service could be the way to take advantage of competitors who do decide to cut their customer service teams.

Or what about increasing your prices by, say, 2%? How many customers – customers with whom you sustained a good relationship for many years – would have to leave you for an unknown alternative for this action not to work? Is that likely? In times when they need to rely on their suppliers?

It is essential that you keep even closer to your market to inform the quality of your strategic thinking.

So what is meant by a strategy? It is a coherent and systematic response to a challenge. It requires a careful diagnosis of the forces at work, a deep understanding of what matters in the market, and an honest awareness of the business’ capabilities to take relevant action.

Strategic thinking, captured in a strategic plan, is the only way to know how best:

• To keep cash flowing;
• To separate good costs from bad costs and take action accordingly;
• To stop under-pricing and work out the best mix in a mixed approach;
• To grow the top line in a sustainable way;

The tactics for flourishing, like the tactics for survival, require strategic thinking.

Sure, a strategy without tactics is empty, but tactics without strategy are blind.

Act – but Plan first!

If you would like an AugMentor Partner to work with you to help you develop an action plan to grow the top line income of your business, then please contact us