4 Big-Time Business Decisions for Turbulent Times Are you concerned about your business' ability to survive tough times? If so, these four business decisions could prove monumental.
By Eric 'ERock' Christopher Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Turbulent times call for decisive measures and actions. Drastic changes in economic and sociopolitical landscapes create crucial decision-making points for business owners or managers. Unfortunately, it is not possible to choose when to address critical quandaries or when they would come up.
Even the biggest corporations cannot easily manipulate markets to their favor. They need to quickly respond to crucial moments that can make or break their business. These decisions must be carefully thought out to achieve the best possible outcomes.
The most important business decisions owners or managers have to confront during rough times present opportunities to demonstrate smart decision-making, as well as serious risks for possible failures. Knowing how to react to these challenges is crucial for lasting success.
1. Restructuring
Restructuring refers to the significant modification of the organizational, operational and financial structure of a company. It includes drastic changes in the way a business operates, the people running it, its debts, expenses, revenue generators and policies. This is done to improve profitability or take advantage of new opportunities while reducing losses or eliminating unprofitable aspects of the business.
In some cases, restructuring will be necessary to downsize or refocus operations. It will also become inevitable if a company is involved in a merger or acquisition.
In one case study, e-commerce marketing services company Optimum7 came to a point when it was left with three options: lay off staff, restructure or sell the company. The company went for the second option.
It was a bold decision that entailed the recreation of the company's execution processes. Changes included hiring project managers to achieve greater efficiency, developing new training structures, establishing a custom project management system and creating a totally new sales funnel for new services.
The decision paid off, as the company held up and raised a more involved, better informed and more efficient team. The company became more profitable, scalable and overall better than what it was before.
Related: How You Can Restructure Your Company's Management Into 21st Century Leadership
2. Alternative investments
Turbulent times do not always spell doom and gloom. Sometimes, they can mean opportunities. As demonstrated by the stock market boom during the pandemic, real economic turmoil does not erase all possibilities for profits. Savvy investors can spot opportunities as they emerge or even before they become evident.
Companies with eroding core businesses and weakening bottom lines can turn to alternative investments like the stock market when the economy is down.
Investing when the economy is bad is surely challenging, but there are solutions that can help businesses perform better. In an email conversation, Dan Ho, co-founder of STAR System, the technology behind the proprietary software used by Globalytics Technology Research Limited (GTR), explained, "The combination of artificial intelligence, data analytics and business intelligence can predict future outcomes with high accuracy in the fields of forex, commodities and digital assets. By recognizing and analyzing vast amounts of data to determine the most likely outcomes, investors can gain useful, real-time trading advice to be competitive in the market."
With the right tools, businesses can explore investment opportunities to make up for the lost or dramatically reduced revenues generated from core business activities.
While brands would generally be wise to avoid impulse buying or selling, AI-powered business intelligence and data analytics can help entrepreneurs take advantage of possible profits from the market movements during highly volatile and uncertain periods of the economy.
3. Dealing with people and relationships
A tough financial situation can create issues with people. Are you prepared to lay off some employees or implement pay cuts to keep the business going? Can you abandon longtime suppliers and business partners for substitutes that offer lower costs? As you encounter the need to adopt some changes, it is unavoidable to deal with the relationship costs.
Decision-making can become especially difficult when business managers take into account the perspectives of investors, board members and customers. This was the case for David Zhao, the CEO of NXT Group, who recently launched their fine-dining restaurant called The X Pot at the Venetian in Las Vegas. After selling his own home, Zhao went all in with his investors to create a $10 million interactive experience that includes robot servers and 3D-animated entertainment, with fresh food flown in daily.
When the pandemic hit, Zhao was faced with the difficult decision of paying his staff while his restaurant was shut down or to appease investors. When asked why he continued to pay his staff during our video chat, Zhao shared, "We treat our staff as the most valuable asset of our venture. They have a lot of vertical mobility in the corporation, so they can become managers and even partners. I think our staff is the reason why we're successful.
When facing difficult situations involving people, your company's core values should ultimately prevail. Things can only get worse if the business fails completely because of unwise decisions that give more weight to personal relationships and the perceived goodwill of being longtime business partners, clients or suppliers.
Related: How Cultivating Relationships Helps You (and Your Company) Thrive
4. Expanding or launching a new business
Again, bad economies do not always mean the downfall of all businesses. Some benefit from the downturn. These companies have the option to expand their operations or spin off some of their business to undertake more profitable ventures.
Of note, many of the world's biggest and most iconic companies succeeded during a recession. Microsoft entered the market on the 16th month of a recession in the United States. Apple started its ascent towards global dominance during the dot-com crash in the early 2000s. Netflix also entered the market during the dot-com bubble. Airbnb, on the other hand, started during the 2007 financial crisis.
It's not just enterprise companies innovating and expanding during challenging times. Even local business owners have found ways to grow their business. As a result of the accelerated digital trend to buy online, businesses now have a unique opportunity to reach new audiences and build a client base that would be difficult to find in the physical realm.
This was the strategy that got Lao Ma, located in Flushing, NY, through the pandemic. According to owner Hua Dong Liu via email, "We focused on social media ads targeting audiences that our research showed might be interested in our offerings but fell outside of the demographic that would usually enjoy Chinese cuisine. When business growth slowed, we experimented by advertising to new customer segments. Fortunately, it's worked well for us."
Launching and scaling a business during times ruled by economic uncertainty is far from easy. Business owners that succeeded prepared painstakingly for the gamble. They knew they were facing a formidable mountain of a challenge. Times of economic uncertainty are when successful companies can prove their resilience — and their ability to truly dominate a market.
Putting a bow on things ...
Turbulent times require businesses to cope. Adapting to the current conditions of the market is not just an option, but a necessity. Sometimes, this entails restructuring and the need to lay off employees. There are also cases when the situation creates opportunities for investments and expansion. In all of these, meticulous decision-making is essential.
It is impossible to know which decision is right or wrong before the outcomes are known. You can't see into the future. What's important is exerting effort and exercising prudence to make sure that the decision you make is something you can stand by.
