When the expertise in business strategies falters, allow moral courage to assume leadership. The wise saying goes, ‘When the going gets tough, the tough gets going.’ The impact of the credit crunch on the market since 2007 has been telling. The share market is experiencing a rough ride with untold miseries for the investors. In 2008, most of the experts agreed that stock market recession is looming large. The next question is how long it will last and what posture the investors need to adopt to find a way out of the crisis.
The party time is over. Declining home values have squeezed the consumer purchasing power and family budgets are adversely impacted by rising food and energy prices. Employment situation is worsening. Investor and consumer confidence is at low ebb. A layman or an expert, no one really knows what is happening and why it is happening on this drastic scale. The economic outlook is causing nervousness at the highest levels. The reasons advanced for this sorry situation are high levels of government, individual and institutional debts accumulated over the last several years. Desperate situations need desperate remedies. Try the following to beat share market recession:
- The most worried party is the company management. No one likes to see the value of stocks tumbling each day. Review how the protracted recession may affect the business.
- This is the time to show sterling leadership qualities. Prove to the employees why you are the benevolent boss, by instilling confidence in them; emphasize the need to stand as one man in the hour of crisis. Keep interaction with all sections of the employees from the lowest to the highest. Be in constant touch with the vendors, customers, creditors, and your bankers. Let them know through your actions that everything is under control.
- At the highest level, accept and explain the reality to the top management, and plan to convert this defeat into a resounding victory. Reassess every aspect of the business. Pay special attention to the marketing g strategy. In a down cycle the top priority is to cash, even if that would mean pruning the profit margin by giving discounts. Give a second look at the planned capital expenditure. If it contributes to productivity and eliminates expenses, go ahead. If you are convinced that expansion needs to be held in abeyance, take a firm stand.
- Cut all the protocol and be in direct touch with your employees. Their information about the goings on in the industry and the market is reliable. Give them opportunity to talk directly to you. Get your data from three independent sources—the top management, the supervisors and the employees. Examine and tally them and look out for the inconsistencies. Try to segregate those employees with the negative approach and at the earliest opportunity get rid of them. This measure may sound harsh, but in the overall interest of the entire organization, it is essential.
- Customer satisfaction is the core issue. If they are loyal to your products, the worst of the situation can be challenged. Get close to the customers.
- Your organization needs every penny in the hour of crisis. Find out avenues to cut down the overhead expenses. Look out for redundancy in functions. Purchasing procedures is the one area where leakage of expenses can be pruned. Purchasing and stores are the most abused departments in any company, and strict vigilance is necessary. Initiate steps to reduce consumption of office stationery.
- Examine all possible avenues to maximize cash-flow. Free cash tied up in inventory by better management of the stores.
This stock market recession is happening in the internet era; as such it has added new dimensions to the problem. But the advantages of the internet tool can be utilized to beat it back by quick analysis of the market trends and prompt remedial measures.