Business owners should approach tough times through 2012 and possibly into 2013 by fighting to retain talented staff, diversifying their service offerings, exploring other markets and intensifying engagement with their customers. This is the view of Derek Bouwer CEO of TBWA\South Africa, a leading multi-disciplinary marketing and communications group.
The European debt crisis, and the accompanying threat of the break-up of the Eurozone, South Africa’s largest and key trading partner, is bound to have far reaching consequences on South African business. “However, companies need not subscribe to a doomsday scenario, as tough financial times are also known to abound with opportunities,” says Bouwer. Using insight gleaned from TBWA\South Africa’s decades of partnering the country’s leading brands there are undoubtedly ways to “future proof” a business.
“There is also much we as South Africans can do to ensure a better future,” says Bouwer, noting that although South Africa’s economic fundamentals remain sound, this should not be taken for granted.
“South Africa’s economic growth is led by consumption rather than saving and investment, and it would be advantageous if we reversed this trend. Less bling and more cash in the bank would be a good first step,” he says.
Here are 7 steps that can be taken to prepare for the tough times:
1. Success is about talent, especially in tough times. To succeed and grow you must have the right people, and to retain the right people you must develop the right culture. Leaders should create and foster a vision that staff can buy into, explaining that while it may take longer to reach the North Star in tough financial times, it is still there. Ensuring a stimulating work environment and a culture of transparency and engagement will keep staff motivated and appropriate recognition of staff – whether financial or non-financial – will encourage people in different parts of the business to identify and cultivate opportunities outside of their specific areas of responsibility.
2. Cultivate a culture of innovation excellence. In good times, the “rising tide” effect tends to make average performance look better than it actually is. Tough times should be used to bring out the best in the best people. It takes a relatively modest investment to champion the most innovative ideas and to get the best performance from people. Critically, cultivating, innovation excellence shows clearly to everyone internally and externally that yours is a brand, a company, an organisation that is progressive, focused and positive in tough times.
3. Drive thought leadership. Most would agree that the potential for return on investment made in thought leadership is significant – from raising market awareness to active lead generation. And, where a company practices innovation and is able to effectively demonstrate and communicate the benefits of that innovation, the impact on customer confidence and their decision to purchase can be profound.
4. Be smarter about organic growth. Chances usually are that different business units or divisions in a company are not aware of the opportunities within the company’s existing clients. It is well-established that most companies are able to add more value to customers and greater profitability to themselves by extending products and services into existing clients. The drive to do this can position a business in additional parts of the value chain that will pay off steadily over time.
5. Consider other markets. While South Africa is set to grow at around 3% this year, other African countries are poised for growth of between 6% and 10%. There is increased interest in Africa on the part of global clients, and a weaker rand makes South Africa more financially accessible to these markets. At the same time, as a country we can export our capabilities to anywhere in the world.
6. Make the hard calls. Tough times necessitate tough decisions. Lean times are a good opportunity to take a hard look at the business, to lay foundations and cut back fat. Everyone is seeking value at this time.
7. Keep talking to everyone. Even in tough times, it is important to maintain effective communications, both internally and externally. Every business cycle over several decades has turned up examples of what happens when you stop investing in your brand to save money in the tough times. Invariably we see that those firms struggle to take off when conditions improve, while some never even get off the ground again. Clearly in tough times one cannot be expected to lavish expenditure on a brand, but there remains a level of investment necessary so that when you emerge from the lean times, you still have a recognizable, sound brand perception and equity among your audiences.