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Digging In to Dig Out: Riding Out the Downturn
By Karen Dry and Linda Hebert
The latest in a series about the tough choices business owners may have to make to survive the housing downturn. The article is an excerpt from Building Women magazine and addresses current market issues and offers real solutions to hard questions.
 Things look bad. But you’ve looked at your business and decided to ride it out.
To make it through, though, you have to love the industry and have an unshakable belief in yourself and your business, according to Lisa Forsman, vice president of operations at Pezonella Associates, Inc., a consulting firm based in Reno, Nev. that provides geotechnical, environmental and civil engineering services.
“Of course we have all seen a drop in business and I’m tired and feeling stretched a little thin,” said Forsman. “But I love it.”
“We are digging in for the long haul,” she added. “You can circle the drain, put a plug in it or do nothing. We are filling the tub with hard work and success.”
Once you’ve made the choice to ride out the market, evaluate your current business model, take a hard look at your non-essential costs and utilize every leadership opportunity because the coming months are going to be lean and mean.
“Now is the time to pick up efforts and create the future of your company,” said Forsman. “Don’t take anything for granted. Success is out there — you just have to find it.”
Evaluate Your Entire Business Operations
Think back on how and why you started your business. How did you get the clients and projects you got? Revisit your mission statement. Then consider:
- Principle Focus. Identify the “sweet spot” for your business — that one source of business that has always made you your best dollar.
Re-evaluate the attributes of your best and most profitable customer. Avoid veering far from that spot if it’s still working for you, but also look for areas where you could run into trouble down the road.
- Failure Not Accepted. This mantra should be repeated on a regular basis. Everyone in your company will feel this, and it will resonate with each person you encounter.
Cut Non-Essential Costs
When business isn’t so hot, look at:
- Time Management. Watch your long-distance calls and cell phone minutes. Also, with gas prices what they are, map out your daily itinerary so you’re not pinballing around the area.
- Staff. No one likes cutting employees, but this is the best time to make multi-taskers out of the staff you keep.
When you cut, cut once and cut deep. This helps mitigate the dread that remaining employees may feel once their friends and peers are gone.
- Office Space. Investigate if you can renegotiate your lease, downsize your space requirements, sublease to another industry member or move to an entirely new location. Seek an experienced commercial real estate agent to help outline your options.
- Bills/Debt. Look at your cash flow situation. You may take pride in paying your bills in the first 10 to 15 days, but in this economy you may have to push the days to give yourself some breathing room.
Also, examine your debt structure and review current credit lines, bank notes and any loan rates. Renegotiate or apply for consolidation loans.
If you’re already in trouble and creditors are calling, work with your bank or even other banks to structure possible debt repayment or consolidation in a way you can manage.
- Liquidation of Assets. Partially liquidating some of your nonessential assets such as computers, office furniture, cars, inventory, additional copiers and other machinery is a good idea, especially if they’re only collecting dust.
Many of these items can fetch up to 60 cents on the dollar.
- Marketing. To survive, you have to keep your name in the mix so your clients and potential clientele know you can still provide what they need.
However, you may need to cut back on marketing materials. Do you really need to reprint that spiffy, high-gloss six-page brochure? Ask your printing vendor about cost-saving options, like a two-sided piece on less expensive paper.
You also may consider hand delivering your brochures, instead of doing a mass mailing.
Be a Strong Leader
When business is down, people look for true leaders to pull them up. Because it’s been nearly 10 years since the last downturn, many of us have no experience as to how to weather tough times.
As owner of your own company, you are the leader, so you need to:
- Communicate. Honest communication with your employees is paramount. Involving your employees in strategic planning for better times ahead will put them at ease.
Listen to their ideas; they could provide solutions you may not have considered. Then find little things to keep the motivation going and celebrate even the small opportunities, like a returned call from a potential client. That’s one step closer.
- Volunteer. If you weren’t an avid volunteer in your community during good times, we suggest you should be one now. Nothing puts your business woes in better perspective than to work with people who have been less fortunate than you.
- Learn. Educate yourself in the areas where you need to hone your expertise or learn more about a new area.
NAHB Women’s Council Vice Chair Karen Dry is president of Garrett Interiors, Inc., an interior design company based in Westlake Village, Calif. specializing in model home merchandising along with residential, commercial and hospitality interior design. For more information, e-mail Dry, or call her at 818-991-3487.
Linda Hebert is the chair of the Women’s Council communications subcommittee and president of Diversified Marketing & Communications, of Pleasanton, Calif. For more information, e-mail Hebert, or call her at 925-577-5300.
Next: Diversify and expand.
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