Over the life of a home storage business, it’s inevitable to experience the ups and downs of changing economic conditions. From robust sales and strong profits in a booming economy to hard-fought sales in a struggling economy, the need to be prepared for both is equally important. All conditions require skill and a carefully mapped plan to capitalize and thrive…or even survive. Strategic planning, crafting a well-thought-out organizational chart, and mapping the flow of projects improves the odds of success.
Despite the fact that many of us have had a good recovery since The Great Recession of 2008, we all know our economic prosperity and expansion won’t last forever – it’s a matter of cyclical economics. I propose we immediately get started squaring up for the next round of survival against our competitors. How to get started? Let’s look at the structure of your organization, and how the mid to long-term economic outlook might potentially impact your business. Are you set up for success or headed into an uncertain, dismal future?
In my experience as a closet and cabinet industry consultant, I’m often asked to help “scale up” a business – something I’ve done and a worthwhile pursuit for sure, but few ask about how to prepare for the next downturn. I’ve experienced more than one sour economy over the course of my career and I regularly challenge my clients to be ready for the next softening. Is that “scaling down?” The short answer is, “Well, maybe?” I’ll explain more later in this post.
As a rule, I always ask clients, “Where do you get your economic forecasts from? How engaged are you in the overall economic outlook? How do you plan around what the experts report?” I’m generally met with lackluster responses and a feeling that it’s not really on their radar. For the most part, I understand why economic engagement falls short. The demands of running a small-medium sized business are great and it often seems there simply is not enough time for everything, let alone being a pseudo-economist.
I learned several years ago that part of a solid (and responsible) business plan is having a dual mindset. Focusing on success, growth, and profitability being equally as important as prepping to weather the storm and make it through the next period of decline in economic prosperity (recession).
So, is “scaling down” the answer to surviving a recession? It could be, but not necessarily in the sense of eliminating people or positions (the next recovery is just around the corner and the need for highly skilled folks to move the business to the next level is a real concern!). It could be as simple as rotating schedules (trimmed work hours) with several cross-trained team members, saving their employment by learning and performing key functions in their organization. Or, depending on the severity of the economic downturn, it could mean reducing staff, but never reducing service and quality.
Something I’ve found all too common in many businesses I’ve worked with is a lack of organizational structure, clearly defined roles, job responsibilities and a system of reporting or measuring success and failure. Having a clear picture of your organization, who is responsible for each activity and how you measure success and failure is the first step in scaling up or down.
Most often, my consulting work begins with a strategic three to five-year plan and an organizational chart (org chart) that contains placeholders, as some businesses are not yet fully developed. Along with the org chart, I work with teams to build the flow: the steps a sold job (or project) takes to move through their company to completion. This means determining who is responsible for each touch point and the responsibilities of each team member. Defining the org chart and flow is critical to managing success in all types of economic conditions – success or failure depends on how well these factors are mapped and executed.
Back to “scaling down.” When we make a determination on how to trim and tighten our belts during an economic softening, we use the org and flow charts to guide us in our decision-making. Activities stay the same and it is imperative that we continue to execute all phases of our business at a high level, however, there may be a need to fold job responsibilities together as staffing or work hours are reduced or if more drastic measures are necessary – eliminate positions.
Overall, “scaling up” or “scaling down” doesn’t change the mission-critical functions that need to take place in a successful, thriving business. If you’ve carefully developed your organization, have a clear flow of actions, and documented employee responsibility, it’s relatively easy to separate or combine these functions to meet the economic challenges of the times.
Finally, strategic planning takes into account a three- to five-year economic forecast action plan. Where to begin? I’ve always relied on ITR Economics itreconomics.com for subscription-based economic reports and they’ve proven to be fairly accurate and useful (I’m not connected to ITR Economics). Whatever the chosen source, whenever sales pick up or slow down, a strategic plan toward the future along with a clearly defined organizational chart and defined roles will aid in long-term viability.
Patrick Layne has 25-plus years management experience and 13-plus years in the home storage industry. He specializes in helping woodworking (cabinet & closet) companies attain and maintain continued success. He works with small to medium-sized business from inception to ~ 25M in sales (1 to ~ 100 employees). His goal is to provide input and direction on how to achieve a profitable, highly functioning, and long-lasting cabinet and/or closet business. Serving North America (US & Canada). [email protected] or 408.568.1297
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