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Posted May 13, 2009

A mid-recession checklist

Things to do in preparation for the recovery

by Frank Hurtte, River Heights Consulting

Frank HurtteHindsight is 20-20, or at least so the old saying goes. For the past six months, many have candidly shared their theoretical plan if they would have had 20-20 vision for the future. The conversation usually goes something like this: “This whole recession thing really caught us off guard. If we would have had just a little bit better indication of the way it would hit, we would have done a few things differently.”

What would happen if we would have prepared a checklist for “battening down the hatches” ahead of a recession? I personally believe our businesses would be in better condition. Many more of us would have been able to cash in on the recession.

Now is the time for laying down plans for the recovery. In the next few minutes, join me as we explore a proposed action plan for the next few months.

In the next 60 days:

1) Evaluate employee performance

I suggest ranking employees by performance. I know it’s considered impolite but I suggest understanding exactly who are the very best and who lags the pack by ranking them from top to bottom. This should include: ability to bring in new business, ability to generate gross margin, effectiveness and ability to grow with your organization.

If you have an employee who falls at the bottom of the list with no prospects for improvement, this is a great time to consider moving them from your team.

Absolutely, positively make certain to share your vision of the future with your top players. Even top employees get nervous when changes take place all around them. The trouble is top employees attract job offers even in recessions. Failure to hold them close may inhibit your future (e-mail us for our Sales Person Ranking Guide).

2) Evaluate potential new hires

There are some good people out there. They may work for a competitor, a supplier or a customer. They are most likely still employed, but unhappy with the direction of their organization. The best ones aren’t looking for jobs. They can be identified and now is a great time to start talking to them. A soft sell works best. When you share your own upbeat attitude about the future, they begin to think of you as a future home – just in time to help you grow on the up-side.

3) Review your process

Would you like to do better marketing but have a tough time getting feedback from your salespeople? Do you wish you could have a better forecast of future business yet get constant lip service rather than quality forecasts? The same thing applies to selling of new lines, sales targets, organized plans and sales accountability. I suggest using the recession as an excuse to make sweeping process improvements.

4) Evaluate your suppliers

Are there suppliers who don’t line up for your future? This can be the result of policies, distribution trends, shipping policy and a whole bunch of other things. Now is a great time to start conversations with new suppliers.

5) Evaluate your customers

Do you know the profit contribution of each of your customers? Do you know which customers are likely to grow and prosper in the coming economic times? Do you know the customers who appreciate the value proposition you provide?

6) Schedule a meeting with your bank/investors

Cash flow and availability of cash to make strategic purchases in the next year will be critical. There may be expansion opportunities after the ramp up on the economy. According to economists, many companies survive (squeak through) the recession but run out of cash in the early stages of the recovery. Plan for picking up some bargains now.

7) Plan low-cost customer events

It’s natural for customers to see a drop off in sales “touches” from everybody during a recession. Many distributors cut back on numbers of sales calls, lunches, golf outings, promotions and other activities. I hear customers say, “We have been loyal customers of AA Distribution for 15 years. Since the recession we haven’t bought quite as much, and they quit calling on us.” Whether this is true or not, it’s the customer perception. Customer events needn’t cost much. Some of the best ones are home spun and almost free. During the 1983-84 recession, I know one distributor who committed to invite one customer a week into their warehouse to talk about future needs. Once the good times hit, the results were a tripling of business over the next six years.

Don’t forget to push your message to the customer’s management team. Management to management conversations can drive gains in all kinds of economic weather. In stormy conditions, they make big decisions.

In the next three to six months:

8) Create your long-term needs list

Need to buy buildings, property, computer systems? There will be bargains on the market. Part of being a savvy buyer is making the right decision today – then standing back and waiting for bargains.

9) Develop a plan for marketing

According to research, companies that continue to aggressively market themselves during a recession come out stronger after the recovery. This has been true during every recession since the 1960s. Since many distributors operate with just a skeleton of a plan, I suggest devising a plan that can be ramped up quickly at the first signs of rebound. If you do not have a professional marketing person on staff, consider hiring help - an outside consultant can be had without breaking the bank.

10) Expand your network for competitors who might be for sale

First, there is no need to buy if you can get their key players and customers for free. But, it makes good sense to know who might be for sale in your area. You may find acquisition candidates allow you to migrate into new territories or new lines of trade.

Weak competitors often serve as the springboard for strong national and regional players that might affect your market. Networking allows you to be more in the know.

11) Market to the “shaky” competitor’s customer base

Buy or build a list of your competitor’s customers. You can take advantage of the other guy’s lack of preparedness. Since you have prepared ahead of time, you will be able to extend a positive message while your competitor is still thinking about what to do.

12) Renegotiate leases, long-term purchase agreements and other items

Landlords, service providers and a lot of other costs can be negotiated downward during these tough times. Take advantage of the recession to lock into lower prices which will extend into the economic uptick.

Frank Hurtte of River Heights Consulting is author of "The Distributor Specialist: Customer Champion, Profit Generator!" It is now available from the National Association of Wholesaler-Distributors. Contact him at



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