Do More, Not Less

Businesses are getting nervous in Asia. China, the biggest customer in the region, is facing a cooling economy. Political and economic uncertainty in Malaysia and Thailand are making people unsure where to place their bets. Firms that want to stay profitable, or at least stay in business, have important decisions to make. Profit, of course, is equal to your Total Revenue minus your Total Costs. During bad economic times your revenues are likely to drop. So, what do you do?

A lot of leaders will look at ways to reduce their costs. The logic is simple: you have more control over your costs while your customers have more control over your revenues. After all, they ultimately decide whether to buy your product or service, and there is only so much you can control that decision, so it seems easier to go after things you think you CAN control. While it might be possible to save money through increased efficiency, many firms will instead look at the easiest way to cut costs: cutting employees.

There are some downsides to this, of course. You end up having to accept the fact that you really are going to have lower revenues. You will have to rehire people later when the economy picks up. If you don’t hire them fast enough when the recovery begins you will lose out on business to your competitors who rehire faster than you. And of course, some of those employees you let go will go work for someone else, and you may end up with inexperienced employees rather than a team that has survived together through hard times. None of these are great options.

So rather than shrinking your business, how about growing it instead?

If you have already got a strong product, your focus now needs to switch to tasks such as marketing and sales. When your customers are spending less money, you need to expand your customer base to maintain or increase revenues. Can the people who design or deliver your products bring their creative talents to marketing and selling the product? You need to look for new opportunities to expand, for chances to take over customers that your competitors are losing, for offering something that others do not provide. You have got talented employees working for you (because if they are not talented, they should not be working for you in the first place, right?), so take advantage of that and put them to good use rather than letting them go.

Think about it: do you REALLY want to shrink your business if there’s any way to maintain it, or even grow it?

It may seem easier to reduce costs than to increase revenues, but good leaders don’t choose an option simply because it is the easiest. When times are tough, try to come out of them stronger than you were before, not weaker.