10 Tips on How to Turn a Crisis into an Opportunity

The moves that companies should make in a crisis are always painful, but survival is the only goal. No one benefits from their downfall: neither the owner, nor the employees, nor the suppliers, nor the state. Nevertheless, success is possible.

Written by Gordana Gelenčer and Vanja Figenwald

 Despite the fatalistic impression that a recession brings, examples from many companies have shown that it is possible to successfully navigate even the toughest economic conditions. A series of measures that can help turn a crisis into an opportunity, which has been one of the favorite slogans in the last two years, is not popular and can cause a lot of bad blood. However, in the end, the survival of the company is the only goal because no one benefits from its downfall: neither the owner, nor the employees, nor the suppliers, nor the state. The moves that need to be made are often not the pinnacle of creativity and inspiration, but, above all, require a thick skin and determination.

1. Cut Costs and Stay Positive
One of the things that is most often mentioned is also one of the most important, no matter how difficult it is to implement. However, when problems arise, costs must be cut. Nevertheless, this should be guided by several criteria: cuts should be made where it hurts the least and where the business will lose the least while simultaneously trying to preserve most of the workforce and providing a positive personal example by cutting expenses and salaries for management or owners, thereby showing solidarity with employees. Maintaining high morale also affects maintaining high productivity. Since a crisis necessarily requires a broader perspective, those who can should try to reduce costs for their regular collaborators because the well-being of all is shared. Advising clients or suppliers on how to reduce their costs or improve business processes is welcome.
This leads to the second measure: staying positive, which does not only mean maintaining high morale among employees or exaggerating unrealistic expectations but trying to spread some optimism to clients and suppliers as well. This is achieved by intensifying communication and constantly informing both workers and other participants about the situation in the company. Of course, sincerely and without attempts at ‘muddling’.
In conjunction with cutting, there is also a focus on the core variables of business, sales, and revenue. What does not directly affect these factors should not be the focus of excessive pondering and strategizing. On the other hand, activities that directly affect increasing sales and revenue should be detailed and optimized.

2. List of Priority Clients
Necessary classification within the company also entails a redistribution of relationships with clients. In other words, every company should create a list of its priority clients, which may not be a pleasant task, but at least it is relatively simple. The most important and loyal go to the top of the list, while non-payers or irregulars go to the bottom. In determining this, long-term benefits should also be considered, but the emphasis is on proven clients who bring the most revenue and benefits to the company.

3. Do Not Cut Marketing
Among the most common mistakes is cutting marketing, a move that is almost never justified in business. A crisis is a situation in which marketing should be intensified because, in addition to increasing client interest, it creates an advantage over competitors, who have likely fallen into the same trap of cutting advertising costs. Without advertising, companies and their products fall into oblivion for clients, and competition or substitutes take their place.

4. Consider Added Value
The next thing that many experts recommend in a crisis is adding value to product lines and business processes. Specific measures depend, of course, on the business and industry of each company, but some typical moves include increasing the value of products (by adding services or options) or their diversification. Of course, with good calculations. Too much division can have a counterproductive effect.

5. Invest in Development
Although it is quite obvious that budgets are tight, companies should certainly try to maintain, or even increase, the level of investment in new products and services. Research and development are almost in the same basket as marketing costs. Continuing to invest in new and better products and services creates a comparative advantage at a time when it is most felt. While the sea is somewhat calm, it is harder to capitalize on a better and cheaper product than when clients carefully weigh what is better for them to spend their money on. Continuing product development can be a crucial element that turns a difficult situation into an opportunity, but also allows the company to find itself in a better position than competitors after the crisis.

6. Do Not Lower Prices
Hermann Simon, one of the most recognized experts in business consulting, also recommends a controversial measure he swears by – not succumbing to the trend of lowering prices for products and services. According to him, the worst thing that can be done is to cheapen proven quality products. The price, he explains, should be maintained at the same level, which can be successful if new value is added to the products. One typical example is extending the warranty for a product or tying a service to it.

7. Focus on Quality Employees
Even layoffs are not an absolute mantra. In most companies, there are people who may not be at the level that the crisis demands, but it should be kept in mind that investing in retaining highly skilled personnel has a resonance greater than the crisis. It is especially important for small companies to use the crisis to retain and attract quality personnel who would normally seek jobs in large companies immediately. Therefore, a crisis can also be a good opportunity for more effective utilization of the workforce, focusing on higher quality, more skilled, and more efficient employees. After all, if anyone can pull a company out of the mud, it is precisely these people.

8. Ready for Quick Changes
Many talk about increasing flexibility, but this term often remains mystified and without concrete elaboration. Nevertheless, it is a very important instrument that everyone who can should reach for. For example, increasing the supplier base is not only a good way to achieve more flexible production and better business conditions but also has the positive consequence of increasing liquidity. ‘Juggling’ with several different suppliers allows the company to be paid from different sources and to relieve those who have greater procurement problems, i.e., extend their delivery and payment deadlines. Clearly, the concept of greater flexibility is extremely broad and includes various areas, from more flexible finances (e.g., hiring temporary collaborators) to more flexible workforce (assigning more tasks to fewer people) to more flexible clientele (focusing on regular and more reliable clients). Specific measures will differ, understandably, from company to company, as few small and medium-sized companies can afford all or most of the aforementioned. Therefore, it is important at the level of each individual company to consider where flexibility in business processes can be increased.

9. Monitor Client Needs, Desires, and Habits
Although it should be part of everyday business, clear and constant communication with clients, i.e., continuously monitoring their behavior, is one of the things that becomes particularly important in times of crisis. As much of your business as possible should try to maximize adaptation to the needs of the most important and loyal clients. Regularly monitoring their needs, desires, and habits is a crucial element not only for the survival of the company but also for creating a solid base for business under all conditions, good and bad.

10. Establish a Rainy Day Fund
Many Croatian entrepreneurs have felt the lack of financial planning firsthand. Regardless of market conditions, all companies should, according to their capabilities, create a certain cash reserve for rainy days, which can prove crucial for keeping the company alive in conditions of worsened liquidity and general crisis. It is good to reinvest profit, but a part should always be set aside for situations like today, when a cash reserve can mean the difference between survival and failure.