4 important business decisions in times of turbulence
August 2, 2021
7 minutes to read
Opinions expressed by Contractor the contributors are theirs.
Turbulent times call for decisive action and action. Drastic changes in the economic and socio-political landscapes create crucial decision points for business owners or managers. Unfortunately, it is not possible to choose when to approach critical dilemmas or when they will arise.
Even the largest companies cannot easily manipulate the markets in their favor. They need to react quickly to critical moments that can make or break their business. These decisions must be carefully considered to achieve the best possible results.
The most important business decisions that owners or managers face during tough times present opportunities to demonstrate intelligent decision-making, as well as serious risks of possible failure. Knowing how to react to these challenges is crucial for lasting success.
Restructuring refers to the significant change in the organizational, operational and financial structure of a company. This includes drastic changes in the way a business operates, the people who run it, its debts, expenses, income generators, and policies. This is done to improve profitability or take advantage of new opportunities while reducing losses or eliminating unprofitable aspects of the business.
In some cases, restructuring will be necessary to reduce staff or refocus operations. It will also become inevitable if a company is involved in a merger or acquisition.
In one case study, e-commerce marketing services company Optimum7 came to a point where they found themselves with three options: lay off staff, restructure, or sell the business. The company opted for the second option.
It was a bold move that involved the re-creation of the company’s execution processes. The changes included the hiring of project managers to achieve greater efficiency, the development of new training structures, the establishment of a personalized project management system and the creation of a brand new sales funnel for new services.
The decision paid off as the company stuck it out and built a more involved, better informed and more efficient team. The business has become more profitable, scalable, and overall better than it was before.
Related: How You Can Restructure Your Business Management Into 21st Century Leadership
2. Alternative investments
Turbulent times don’t always mean bad luck. Sometimes they can mean opportunities. As the stock market boom during the pandemic demonstrated, true economic turmoil does not erase all possibilities for profit. Savvy investors can spot opportunities as soon as they arise or even before they become obvious.
Companies with eroding core businesses and weakening financial results may turn to alternative investments like the stock market when the economy is down.
Investing when the economy is bad is certainly a challenge, but there are solutions that can help businesses perform better. In an email conversation, Dan Ho, co-founder of STAR System, the technology behind the proprietary software used by Globalytics Technology Research Limited (GTR), explained: High precision in forex, commodities and digital assets. By recognizing and analyzing large amounts of data to determine the most likely outcomes, investors can gain useful, real-time trading advice to compete in the market.
With the right tools, companies can explore investment opportunities to make up for lost or significantly reduced revenue generated from core businesses.
While brands would generally be wise to avoid impulse buying or selling, AI-powered business intelligence and data analytics can help entrepreneurs take advantage of possible benefits from market movements during times of crisis. very volatile and uncertain periods of the economy.
3. Dealing with people and relationships
A difficult financial situation can create problems with people. Are you ready to lay off some employees or implement pay cuts to keep the business going? Can you ditch long-standing suppliers and business partners for substitutes that offer lower costs? As you encounter the need to embrace certain changes, it is inevitable to face the costs of the relationship.
Decision-making can become especially difficult when business leaders consider the perspectives of investors, board members and clients. This was the case with David Zhao, CEO of NXT Group, who recently launched his fine dining restaurant called The X Pot at the Venetian in Las Vegas. After selling his own home, Zhao partnered with his investors to create a $ 10 million interactive experience that features robot servers and 3D animated entertainment, with fresh food shipped daily.
When the pandemic struck, Zhao was faced with the difficult decision of whether to pay his staff while his restaurant was shut down or to appease investors. When asked why he keeps paying his staff during our video chat, Zhao said, “We treat our staff as the most valuable asset in our business. They have great vertical mobility in the company, so they can become managers and even partners. I think our people are the reason for our success.
In the face of difficult situations involving people, your core business values must ultimately prevail. Things can only get worse if the business fails completely due to reckless decisions that put more weight on personal relationships and the perceived goodwill to be longtime business partners, customers or suppliers.
Related: How Cultivating Relationships Helps You (And Your Business) To Thrive
4. Develop or start a new business
Again, bad savings don’t always mean the downfall of every business. Some are taking advantage of the crisis. These companies have the option of expanding their operations or parting with part of their activities to undertake more profitable businesses.
It should be noted that many of the world’s largest and most iconic companies have been successful during a recession. Microsoft entered the market in the 16th month of a recession in the United States. Apple began its ascent to world domination during the dot-com crash in the early 2000s. Netflix also entered the market during the dot-com bubble. Airbnb, meanwhile, started during the 2007 financial crisis.
It’s not just companies that innovate and grow during tough times. Even local business owners have found ways to grow their business. Due to the accelerated digital trend to buy online, businesses now have a unique opportunity to reach new audiences and build a customer base that would be hard to find in the physical realm.
This is the strategy that got Lao Ma, located in Flushing, NY, through the pandemic. According to owner Hua Dong Liu via email, “We focused on social media ads targeting audiences who our research found might be interested in our offerings, but were not in the demographic that would generally appreciate. Chinese food. When business growth slowed, we experimented with advertising to new customer segments. Fortunately, it worked well for us.
Starting and growing a business in times of economic uncertainty is far from easy. Successful business owners have carefully prepared for the bet. They knew they were facing a formidable mountain of challenges. Times of economic uncertainty are when successful companies can prove their resilience and ability to truly dominate a market.
Put a bow on things …
Times of turbulence force businesses to cope. Adapting to current market conditions is not just an option, but a necessity. Sometimes this leads to restructuring and the need to lay off employees. There are also cases where the situation creates opportunities for investment and expansion. In all of this, careful decision making is essential.
It is impossible to know which decision is right or wrong until the results are known. You cannot see into the future. What is important is to exert effort and exercise caution to ensure that the decision you make is something you can stand up for.