Change can challenge our personal as well as professional resilience. Moving from the known to the new in uncertain economic times requires not only business acumen but staying emotionally healthy as well.
Emotional health – how we think, feel and act – is the foundation for every business decision.
All analysis, strategizing and problem-solving start with how we think or feel about our environment, our options and ourselves. Actions stem from those thoughts and feelings. Emotionally healthy persons usually see more options and can make decisions based on data, needs and opportunities. When emotional health is not optimal, decisions may be made out of nonproductive fear, which rarely yields the best results.
Suggestions for maintaining emotional health during challenging times include:
- Maintain physical health by exercising, eating healthy foods and getting sufficient rest. Brains work best when our whole bodies are well.
- Maintain optimism. (Note: optimism is not the same as denial, which is ignoring problems as if they don’t exist.) Optimism believes there is a future and a way to get there. Negativity is contagious and nonproductive.
- Remember alcohol is a beverage, not a coping mechanism. Alcohol may appear to help us relax but it is a depressant that may also interfere with sleep. Sleep problems can lead to depression and vice versa.
- Stay connected to your loved ones. Over-emphasis on work can strain personal relationships. Make sure there is time for people you care about and who care about you.
- Stay true to your values. Under pressure, persons sometimes compromise what their personal and professional values are. That leads to inner conflicts that usually make things worse.
- Stay action-oriented but allow yourself the natural emotions which come with stressful times. When a ship is sinking, people bail water – they don’t think about how they feel about bailing water – but there comes a time when the bailing is over and the feelings surface. Paradoxically, more problems come from denying emotions than feeling and expressing them. Find ways to express those feelings – with a trusted confident, mental health professional, or even with yourself through meditation or journaling. Expression brings a kind of closure that clears the way to meet the next challenge.
Stephanie Hittle, MS, LPCC is a licensed professional clinical counselor in private practice in Centerville, Ohio. She can be reached at firstname.lastname@example.org. Her web site is www.stephaniehittlecounseling.com.
Planning for Success
Research data shows businesses with a plan fare better
The value of having a business plan has been debated in business circles for years. However, a recent paper presented by Eason Ding and Tim Hursey at the University of Oregon, concludes with statistical validation that completing a business plan increases the success of attaining the objectives cited by survey respondents including: getting a loan, making a major purchase, getting an investment, recruiting a new team member, thinking more strategically and growing the company.
Ding and Hursey’s source was a survey conducted in 2010 by Palo Alto Software of 2,877 Business Plan Pro software users.
Business owners bear many pressures brought on by external sources from increasing regulations to softening consumer confidence. Taking the time to document the business plan is one thing that can be controlled internally and has shown to produce positive benefits.
Harry recently met with an executive with over 25 years of business success. His business has been suffering over the past two years and problems culminated when his bank pulled their $2.5MM credit line. When asked for what he presented the bank – current strategic plan, financials, etc. – he had nothing of the sort prepared. It is sad to see experienced managers forget the basics and allow their business to suffer as a result.
Get the plan out of your head and onto paper. Going through the process forces you to articulate of major initiatives while getting your entire team on the same page.
“Good fortune is what happens when opportunity meets with planning.” – Thomas Edison
While I don’t profess to be an economist, I do have the opportunity to listen and participate in many business discussion groups. More conversations these days seem to include the topic of inflation. When might it become a factor and how would it affect our respective businesses?
The most recent CPI (Consumer Price Index) for the United States was up 1.5% over last year. It was lower than our historical average of about 3% and even lower than the current Federal Reserve Target of 2%. But while the actual number is well below traditional inflationary concern, almost everyone agrees the lower number is driven by unusually high unemployment and the corresponding lack of wage pressure.
Many developing countries are already seeing inflation in excess of 4% and the US has seen huge upticks in commodity prices. During the last six months, oil is up 9%, copper up 36% and silver is up over 50%. Agricultural products like cotton is up 100%, wheat up 24% and soybeans up 42% – these increases are already being felt by everyone in the grocery store.
How should we respond?
As small business managers, I believe we should be ahead of the curve. If raw material prices in your business have increased, you should already be calculating price increases. But even without direct cost of goods increases, I believe a review and decision on pricing should be made now.
Even in unique economic conditions, the standard guidelines of pricing still apply:
Avoid making generic pricing decisions by product category or vendor. Some items are more or less price sensitive than others. Establish a company wide goal for gross margin increase, but make adjustments on an item-by-item basis.
Observe your competition and their advertising habits. Items that are heavily promoted make customers more sensitive to the price. Go easy when increasing the price on these items, utilizing less price sensitive items to achieve overall gross margin increases.
Items with sales increases in excess of 5% more than the overall company rate of growth are prime targets. Remember, it is always easier to raise prices when demand is increasing.
Time your price increases according to seasonal trends. Raise prices during slower sales periods so you can “listen” to the marketplace and correct any missteps before entering a heavier sales period.
Informing your customers of a pending or implemented price increase varies by company. Those utilizing contracts may be obligated to provide prior notice – another reason to get started now. Even if notice is not required, take the time to arm your staff with good talking points. Oftentimes, the strongest resistance to a price increase is internal, not from the customer. Educating your team is essential for good customer service.
At a recent CEBI (Chief Executive Boards International) meeting, we discussed a few creative strategies for increasing margins. The airlines have made a science out of indirect price increases: ticketing fees, baggage fees, seat fees, etc., so follow their lead. Consider adding surcharges for shipping and handling, or fuel; negotiate shipping discounts and continue to bill the customer list price; or implement a provision for an automatic price increase based on a recognized published index.
I am certain there are options within your company to generate additional gross margin and encourage you to take a look.