For most of us, 2015 has been one of those years where business leaders were continuously faced with new obstacles to progress. Tepid demand, a strengthening dollar (+13%), the first interest rate increase in 8 years, a slowdown in China’s growth rate (-30% to – 50%, depending on who you listen to), oil down (-30.5%), volatile stocks on the DOW which is down (-2.2%) for the first time since 2008, geopolitical turmoil, a decline in the manufacturing index (-14%), etc. etc. etc. 2015 should be a reality check for all business leaders as they contemplate how the chapter entitled 2016 should be written. Initial analysis by economists and business leaders indicates a very pessimistic view on 2016 for very good reasons. After all, we are in the 8th year of an economic expansion and history will tell us that a recession is due soon. Many big companies such as 3M, Verizon, and AT&T are reducing capital spending, while GE, and United Technologies are aggressively cutting costs and squeezing more savings from vendors. A recent survey by the National Federation of Independent Business shows that only 25% of small businesses are planning capital outlays for 2016, the lowest level since the survey started in 1974 implying that small companies are in maintenance mode and also have a pessimistic view. The only industry segment bucking the trend is the consumer products sector. So, what is the main theme of the chapter you are writing for 2016? Should it be one of continued optimism or should it be one of preparation for a downturn and continued turmoil? The answer to that question will be very dependent on:
- Your company’s stage in the business lifecycle
- The industry you serve
- The financial health of your company
- Your strategic objectives
- and many other variables…….
So, what strategies are you going to choose? Will you be in maintenance mode, or will you choose a more proactive strategy that includes paring cost, analyzing the profitability of your products and customers, implementing new cost reduction programs, etc.? Choosing the right strategy for the next chapter in your company’s history is a critical activity and shouldn’t be taken likely or done in a vacuum. You should consider inviting the key stakeholders in your company and engaging outside help to consider the plethora of options available to you in preparing for a downturn, with a focus on continuing to grow the top and bottom lines. Time is of the essence and even if 2016 turns out to be a great year, you company will be healthier and prepared to weather whatever the global economy has to throw at it. If you would like to find out how Group50 consultants can help you or members of your team write your next chapter anywhere in your company, call us at (909) 949-9083, drop us a line here, or request more information here.
About the Author: Jim Gitney is the CEO of Group50 Consulting and spent over 25 years in corporate America before founding Group50. He has been through 7 economic cycles and has worked with large and small companies in advising them on how define and implement the appropriate strategic roadmap for their company in times of uncertainty.
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