I’ve received many questions following recent articles on how to manage during difficult times.
Readers are asking what specific things they could do, or I have done, or we are planning to turn the generic advice into practical measures.
Well, I suppose it all depends. My business situation will be different from everyone else’s, so my decisions may or may not be relevant to others, but I am happy to share some of the tactical options we took to make our business less vulnerable during the current downturn in our industry.
I need to be careful, however. Being less vulnerable is the same thing as being more resilient, but these are relative terms.
We are trying to be less vulnerable than we were before, more resilient that we would otherwise have been had we not taken action, but that doesn’t make us immune to market pressures and industry conditions.
We are under the same pressures as our customers, competitors and suppliers, and this will have an impact on our sales revenues and operating profits. Our challenge is to be as healthy as we can be given current challenges.
For my business, it can be summarised in five areas:
Having clear priorities and focus, yet having a sufficient diversity set of services, geographic spread and customers base
Addressing big risk exposures
Focusing on future sales
Making sure we don’t take on too much debt
There were several stages to us setting clear priorities:
Adopt a single common set of Core Values across our entire business. Have a very clear description of why we are in business and who benefits from us existing.
Define what we want from leaders in our business.
Set out our clear strategic objectives that shape the choices we make along the way.
We sold off some non-core businesses, and we put others into joint ventures with key partners; this freed up management capacity!
We then defined our short-term objectives:
No let-up in our Core Values – we will still walk away from jobs that don’t match them.
Let’s do what we need to do to meet market performance expectations
Remain optimistic about the longer-term and be willing to invest.
We tried to ensure that no customer has more than 10% of our business.
We targeted less than 15% of our business in fixed price/lump sum contracts; we decreased this down below 5%.
We planned for consolidation of our back-office support services.
We stopped exhibiting at larger trade shows; we cancelled memberships for several trade organisations, cancelled free bus services, introduced a tighter travel policy and stopped various bonus schemes. We moved teams from offices to open-plan to increase building occupancy; we introduced electronic payslips and hundreds of other cost-reduction ideas.
Our message to our teams was simple – we are facing tough times ahead, we need to be even more competitive, and every pound saved is someone’s job protected.
We cut contractor rates in June 2014, then again in December, passing the savings onto our customers; others followed suit – we got the criticism and the credit.
We froze staff salaries ahead of the market too.
We ramped up internal collaboration to generate more sales leads; we put everyone on a common system and rebranded the whole business with common branding.
We reviewed our service-lines to identify cross-selling opportunities and potential gaps.
We made sure all of our sales opportunities were in a single pipeline that we can analyse and use for business planning.
We reduced our debt and increased our borrowing capacity.
And, all of this has helped us to be more resilient.
None of the tactics are particularly unusual or clever, but they all take a lot of effort and determination by my team. So far so good, but we still have lots of uncertainty ahead.
Bob Keiller is an industry leader and the chief executive of Wood Group. To read more from him go here.