During a recession, businesses seek to maintain or improve their efficiency to manage lower revenues, contain costs and avoid losses.
By exploring different ways to reduce the impact of a recession, good business owners avoid impulsive decisions that could harm the business during the economic recovery stage. Their focus is on applying cost-benefit analysis to the core business activities.
Using cost-benefit analysis, which estimates and totals up the equivalent money value of the benefits and costs to the business to establish whether the cutback exercise is worthwhile or counterproductive, successful business owners overcome the natural impulse to take action that will quickly reduce direct costs, such as cutting employee headcount and benefits or downsizing to smaller premises without considering the long-term implications. The problem with the cut-costs-first, ask-questions-later approach is that it could easily reduce the business’s ability to respond to increased demand when the economy begins to pick up, because the business would have to invest in new premises or compete to onboard skilled employees, and train them, at a time when the general cost of these factors of production may be increasing.
Acquiring technology to increase efficiency and providing training, coupled with a suitable indoor physical working environment (light, noise, temperature etc.), are just two drivers of employee productivity that will help employees maintain focus and avoid absenteeism, even if they work from home.
The benefit of hiring specialist professionals such as business consultants and accountants is unquestionable; however, understanding precisely what has to be measured, quantified and managed for each specific, unique business, can only come with the help of those involved on a day-to-day basis, including the middle management and representatives of the workforce.
Happier employees make happier customers, even during a downturn. There are plenty of statistics to back this up, but it’s also just plain old common sense.
For an impartial view of your business’s unexploited areas, contact Flourish to get your FREE Business Performance Assessment.