SENIOR’S SOLUTIONS NUMBER 19
Whatever you think of the government’s actions, all kinds of factors make it certain that another tough year lies ahead. There are ways to make the best of it, says Grahame Senior
Hard times ahead? How to Manage the Downturn
T
he conventional wisdom is that, whilst many businesses man- age okay in the first half of a recession, it’s the last little bit that takes no prisoners. We have had two years of pretty grim times econom- ically. However you forecast it, 2011 seems set fair to be even tougher. But there is hope for the steadfast! Business travel budgets are likely to be set lower. The public sector, in terms of both its own budgets for activities and the financial stability of its employees, is going to be severely constrained. Individuals are going to be increasingly concerned about the twin threat of rising inflation and increasing interest rates – particularly the effect on mortgages. All of this means that discretionary spending, corporate spending and consumer con- fidence are all under threat. Whether your business is hospitality or leisure, it’s hard to categorise your- self as ‘essential expenditure’. The outlook seems gloomy. Experience tells that for those who hold their nerve and plan ahead it’s a survivable situation.
Planning is the key It would be a brave busi- ness that forecast a significant sales uplift for the coming year. A more prudent approach is to look at a level revenue target – even a lower total sales scenario. The obvious corol-
lary is that, if sales are going to be level or lower, overheads have got to be con- tained or even pruned. I doubt there’s a single reader who doesn’t feel that they’ve done quite a bit of pruning already in the past few years and that there is little left to cut. However, the fact that we are so long
into a climate of financial constraint means that attitudes across many supplier businesses have changed significantly, becoming more realistic. Headline prices may be up, but many suppliers are very willing indeed to trim their costings in order to achieve security of payment and a continuing relationship. A good starting point is
“We’re all in it together and the opportunity to offer real value and a proper relationship with customers who have already proved loyal has never been stronger”
to review the total over- head budget line by line at the beginning of a new year and look at those costs which can be contained or man- aged better. The whole area of communica- tions is a very important aspect of this and using electronic rather than physical means you can
cut costs quite significantly. Control your cash
Most businesses in our sector tend not to have a flat year in terms of month-by-month income. If you are a business which starts its financial year on 1 April, there’s every likelihood that the worst three months of the year, in terms of sales, will be the last three winter months. It’s very important to plan your budgeting and your cash con- trol so that the period up to the end of December (or even into mid-Janu- ary) is seen as a time to build up cash reserves to ensure that there’s suf- ficient in the bank to get through the lean days of winter. This philosophy of managing cash also applies to man- aging costs. If you ensure that your planning minimises outgoings in that difficult last three months, it will make a very big difference.
HOW TO KEEP YOUR TEAM CONFIDENT AND ENERGISED 1 Review the past year’s results together and
brainstorm the lessons to be learned. 2 Treat every member of the team as valuable, and
allow them to speak their mind and find their place. 3 Wherever possible, share the benefits of success and the consequences of failure. A transparent bonus structure as part of the reward package can create real motivation in these tough times.
70 Read Leisure Management online
leisuremanagement.co.uk/digital 4 Ask your team and your customers for feedback.
Listen to it and react to it positively, not defensively. 5 Encourage bright ideas and suggestions
and try new things and new event ideas. 6 Take the time to talk to each individual about
their own career and agree a clear plan for them. 7 Share the facts and figures about your business progress and incentivise all helpful initiatives.
ISSUE 2 2011 © cybertrek 2010
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