Hope is Not a Plan

“What are you going to do now?!” My Army days are long gone, but I still vividly recall the question being shouted repeatedly during training exercises. The military has always focused on training, and one of the most persistent lessons is the need to always have a plan.

As any situation evolved, you could count on someone in your face barking, “Well, what are you going to do now?” The message was clear and it's a message that translates well in today's business world: Always have a plan based on the current situation and be ready to execute that plan.

But these days that 'current situation' keeps changing and we find ourselves more vulnerable to outside forces than in the past. Fuel prices, sourcing issues and changes in Chinese export subsidies are but a few of the forces impacting our work and creating a new reality that demands change in how we operate. The new fundamentals are not typical of the cyclical changes we traditionally experience in business. Instead, they represent a permanent and structural change to our business environment. Higher selling costs and continued margin pressure from the supply chain are re-writing the rules and it's hard to imagine a total return to the old ways.

So, if a new set of business fundamentals is the scenario for the probable future, then what are you going to do now? Hunker down, cut costs across the board, wait for things to improve, hope for better days? Doing nothing differently and hoping for better days is not a strategy. Sitting still never worked in the Army and it doesn't work for business either. Hoping for the best is not a good plan.

During a downturn, cuts are necessary and prudent. However, it makes no sense to slash uniformly or to focus solely on easily-cut discretionary spending. Failing to tailor the strategic plan to the situation ignores the fundamental issue of adapting your business to meet the new environment. Instead, it's time to get very clinical about what to do.

Numbers are not sentimental; they'll always tell the objective story without bias or opinion. Even in hard times, taking a good hard look at the numbers will likely reveal some positive trends and successes. Pay attention! This is where your business is making headway, even in the face of the tough times. Look at investing in these areas to maximize their potential. In Vegas terms, “double down” where the odds favor success. Conversely, pinpoint what's clearly not working and invest fewer resources in these areas or consider eliminating them altogether. Approach this process from an analytical mindset and remove the emotional, or “we've always done it that way” thinking. Put each aspect of the business through a thorough return on investment (ROI) analysis and do more of what the numbers tell you works and less of what doesn't.

You and your customers are dealing with the same situations, so show them you understand their business needs with every interaction. Customize your message to your audience — they'll appreciate the effort and you'll do a better job of filling their specific needs. People in Michigan will respond much better to NCAA license promotions for Michigan/Ohio State than they will Alabama/Auburn. Take the time to personalize your approach.

Very often, service improvements act in concert with cost reduction. For example, installing a Customer Relations Management package on your website lets your customers service themselves 24/7, while reducing the costs and demands on your customer service department. Let the customer check on an order or pay a bill anytime they want. Look at what self serve has done for FedEx and UPS — who really wants to call and be put on hold in order to track a package when they can simply log on and find out for themselves?

Another way to improve your service is to establish and honor customers' preferences. Ask customers what they want and then follow through. If they are interested in new products, but not in closeouts, then send them emails/notices when new products are available, but leave them off closeout communications. Their behavior or preferences will guide you toward a more personal, compelling approach to them and they will thank you for listening.

Create timely and easy-to-understand promotions and displays that feature the right product for the times. People are still going to buy gifts this year, but if the prevailing trend is toward less expensive gifts, then put $20 retail items out and make them easy to see and buy. This works on the retail and wholesale levels. Wholesalers need to understand this trend and supply choices at lower price points that will allow retailers to maintain their margins.

The plummeting U.S. dollar magnifies the impact of global inflationary pressures, making it harder for Americans to travel and conduct business overseas. If the exchange rate squeezes this side of the business, the balance is that the cost of U.S. goods and services is shrinking. Target the foreign buyer, whether it is the European tourist here for a shopping visit or the Latin American store on a buying trip. Either way, decide on your new target and make the necessary adjustments. Business Week reports that international tourism rose 20 percent to 8.5 million visitors last year in New York City alone. And the emergence of “We Take Euros” signs in store windows shows that many business owners “get” the message. Are you doing enough to welcome these potential new customers? (For more on selling to overseas customers, see “Dollarmania!” in Gifts & Decorative Accessories., January 2008.)

If you are on the wholesale side, take the same approach. Dust off your customer lists and reach out to your old international customers. Get creative — share these lists with non-competitive peers and double your coverage. Make sure that you take advantage of this aspect of markets and all the incentives they offer to reach your customer base. Once you have a plan to talk to the international buyer, be ready to act. Make it an easy and comfortable experience for them to do business with you. UPS, FedEx and a multitude of freight forwarders have a vested interest in making exporting easy, so lean on these resources.

There are winners alongside the losers in every business cycle. So, what are you going to do now? During the Revolutionary War, the British clung to their old 'line' fighting tactics and the Colonial army hid behind trees and just picked them off. Hope clearly did not work for the Redcoats. Times of change create the environment for aggressive and creative companies to set the new standards in product, marketing and customer service. Now is the time to evaluate your situation and make the strategic changes that will help you prevail. For those who can assess the situation, make and execute a plan, the payoff is a head start.