The market for your goods and services goes up, and it goes down. Up is good, down is bad. However, downturns in the economy don’t have to mean disaster for your business; but it may mean you will have to downsize operations, especially if you are a labor-intensive firm serving a consumer-sensitive market. If you intend to survive in a down market there are tough questions that need equally tough answers. For example: “Where do I start? When do I start? Should all levels of management participate in the downsize plan, or just upper management? What rules should we follow? Are there any guidelines?”

You start at the top and examine the bottom, and you start today. Only top management should participate. The rule is survival, and yes, there are guidelines.

All firms, consumer-sensitive or not, should be continually testing their market for downturns. In fact, it would not be a bad idea to have a strategic downsize plan to match a strategic growth plan. Your goal is to survive. Here are four considerations which could make the difference between you or your competitor coming out on top. For other suggestions, see our website at www.tulenko.com where we have presented many other tips for survival.

BUILD A SURVIVAL TEAM
You need top-level management skills for a downsize survival team, so build from the top down using your best managers only. Why only top management? First of all, it is their job; second, they will be able to view changes without too many proprietary feelings that it is their program being changed, reduced, or eliminated.

Why not include the front-line employees that daily deal with customers? Simple. Input from your front-line employees on products and services wanted or needed by customers is important to the down-size decision making; but these same front-line people have a focus on job protection, not job necessity. Involving them in the downsize plan will foment fear, and that could cost you the services of many valuable employees, which may panic your customers, which would put you out of business in nothing flat. Keep everything at the top level if possible.

If your employees do challenge what you are doing, be up-front. Tell them the truth, and enlist them in your projects. Yes, challenges will occur, and as top management, you will need to address these in honest terms. You cannot hide forever.

START WITH THE CUSTOMER
Put your downsize team to work on analysis. Start with what your customer expects when they spend money with you. Questions they are to answer should include those such as: “What products and services do our customers buy? Why do they buy from us? Are all of our products necessary or are we carrying a product just because it, ‘rounds out’ the product line?”

After you go through the product line, start on the services that accompany those products with questions such as: “What company functions are necessary to support the products our customers are purchasing? Do our customers normally request our support products as necessary items or are they perceived as ‘goodies’”?

Among other things this analysis will uncover will be the discovery of company products and services that were put into place in response to a long-forgotten need. You may also find internal functions which could be performed at less cost by outside vendors. Examine everything.

BUILD CUSTOMER RELATIONSHIPS
You personally, and every single one of your senior management team should visit all major customers with the aim of firming or developing long-range contracts beneficial to both of you. You need them, they don’t need you. They have your competitors as backup. Use credit lines, back-office supply depots, on-line ordering, different delivery systems, and all the newest and best of the dot com world to make it easier, more dependable, and less expensive to deal with you.

Contact your own key suppliers with the same ideas, and don’t forget to arrange for extended credit lines from them as well. They will want to protect their sales and your purchases from bumps in the road. Immediately start building a cash reserve so you can take advantage of future opportunities denied to your cash-poor competitors.

UNIONS
If you have unions, you have far more serious problems, and will need the assistance of a legal firm well versed in union law. You will also have to add union personnel to your top-level management team. That’s life.

WHAT TO AVOID
Don't over-react. It is not necessary, nor is it wise to do everything at once. Use a small amount of downsizing at the beginning. You can always increase the action if conditions warrant. Over-reacting at the beginning could catch you short if the downturn is small.

Don't make general across-the-board layoffs. This cuts all areas, and may cause considerable damage to your company's ability to service the customer. In addition, your staff will jump to the conclusion that they don’t matter, only the dollar matters. You don’t need this.

Don't cut R&D. In fact, this may be the ideal time to start development on new customer products so you can have them ready to market when things turn up.

Don't panic. The downturn may be small, or short, or may not happen at all.

IMPLEMENTATION
Implementing your plan is another plan. It’s not enough to decide what to do; you also must decide how to do it. I suggest you hire a public relations firm experienced in downsizing to guide all communications between you, your upper-management staff, your unions (should you have them), your employees, your suppliers, and your customers.

(NOTE TO EDITORS: PLEASE INCLUDE THE FOLLOWING.)
Paul Tulenko is a Small Business Success Consultant based in New Mexico. Additional tips and suggestions are available at www.tulenko.com or call (toll-free) 1-866-TULENKO.