Business confidence often correlates with customer buying patterns. As the latter shifts, how do small business owners continue to lead?
The latest CompTIA IT Industry Business Confidence Index results are in, and they show a 1.4-point drop.
That brings the overall index to 61.7 on a 100-point scale in Q3. The decline, while worrisome, isn’t abnormal. Since the index’s inception in 2009, it has fallen every third quarter, to rebound in the fourth.
However, that trend may be of little comfort to small-business owners, as they tend to be more vulnerable during periods of low confidence. Smaller margins, budgets, and pipelines cause worries of whether the third quarter will be their last.
The concern is valid but it’s also surmountable. Small-business owners in any industry can lead and succeed in times of low business confidence. The solution is to understand the potential consequences of an economic slowdown and to counter them with a multi-pronged offensive.
Related Article: How to Improve Relations Between Your Managers and Employees
Common Issues in Times of Low Confidence
Business confidence often correlates with customer buying patterns. As the latter shifts, so does the former. Small-business customers and consumers in general often postpone their purchases until the fall and winter months, meaning a summertime trough is to be expected.
Without an accurate understanding of those current and historical trends, however, business owners can go astray. Lacking proper context, some owners might start basing business decisions on fears or concerns about what the competition is doing. And though there’s nothing intrinsically wrong with monitoring competitors, making business decisions on speculation instead of fact can increase risk substantially.
In addition, small-business owners may avoid having open and honest communication with employees during a time of low business confidence. They assume that sharing details will weaken morale and cause a mass exodus, despite the obverse being true much more often employees stay with companies that are transparent during both the good and bad times.
Finally, some business owners may turn to short-term plans rather than long-term strategies. This response is understandable but ineffective. Businesses grow when their owners act from positions of strength and stability not when volatile marketplace and consumer expectations buffet businesses.
Keeping Your Company Strong Despite Lower Industry Confidence
Instead of making snap decisions based on fear of market confidence, business owners should develop a plan that spans times of both low and high confidence. Doing so prevents employee turnover, instills optimism and confidence, and identifies areas of investment that increase the company’s competitiveness and market share year-after-year. Here are a few things you can do to help your company succeed despite slowdowns.
1. Stay Busy with Cost-Effective Projects
It can be tempting to shut down or scale back operations when confidence dips, but that may not be the most effective option. Yes, massive cutbacks might help you weather a stormy period, but they won’t help you truly thrive. Ensuring that your company has ongoing work, on the other hand, displays business continuity and communicates stability to employees.
Obviously, you don’t want to go overboard a slow period isn’t the best time to remodel your office or hire a bunch of new employees. But low- and medium-cost projects are fine investments to make: Schedule an internal audit, allocate some manpower to fund scouting, or assess the effectiveness of your current processes. If there are any tasks you haven’t had time for previously, a period of low confidence could be the time to tackle them.
2. Plan Future Investments
Second- and third-quarter slowdowns provide ample opportunities to assess threats and channel strategies. Since the months are slower, business owners should have time to accurately and thoughtfully consider future investments.
Some business owners focus exclusively on new opportunities during these times and, in doing so, overlook a rich resource: existing customers. End users often share features and services they would enjoy having. Take advantage of that willingness to share by reaching out to your current customer base. You can then use that information to increase sales, loyalty, and referrals even in a sluggish economic period.
3. Build Strategic Partnerships
Summertime can be ideal for building partnerships, particularly for small businesses with limited resources. By partnering with other organizations, a business can keep costs low while growing into new service areas.
Partnerships have other long-term advantages, too. They can decrease time to market and lead to new, innovative products and solutions.
4. Promote Culture and Engagement
“Workplace culture” and “engagement” aren’t just buzzwords. Gallup reports that engaged workplaces see higher levels of productivity, and 85 percent of organizations view culture and engagement as top priorities in 2016. The two components work together to impact profitability, product quality, and turnover.
Because low-confidence months can be hard to bear, particularly if employees fear losing their jobs, ongoing communication and engagement are paramount. Regular, honest discussions can keep employees productive and instill them with confident in the company they work for.
5. Lead by Example
Employee engagement programs are a worthy investment, but they won’t go far if they aren’t led by an actively engaged executive team. Successful business owners lead by example, not by programs and memos. They provide direction, exuding confidence even when the market doesn’t.
A small-business owner who maintains perspective, especially during times of low performance, can inspire their employees to do the same. Sluggish months come and go and will come again historical data and reports prove it. But such sloughs can be countered successfully by forward-looking leaders who stick with smart, long-term strategies.
You can’t always control what market trends are going to bring, but you can control how your business handles growth and loss. Use the above tips to plan out a lasting game plan that will get you through periods of low confidence. It might not be easy to ride out concerns over poor industry forecasting, but if you’re working to provide strong, stable leadership through the drops, your business will reflect that.