Yesterday I met a man with a manufacturing business.  He was really fed up with business – he makes great quality product and even supplies the trade, who label it up with their own name.  But he’s seen falling sales and from his body language is feeling pretty depressed and fed up with his lot in life.

He told me, and he really believed this, that it’s all the government’s fault.  In fact he said, "until the government changes things, manufacturing will continue to die out in this country".

Well let’s take a step back from this, and look at the pattern of the economy for the past 30 years – we had a big recession in the early 80’s, a recession in the early 90’s and now we’ve got another one.  This cycle repeats itself every ten to twenty years.  So surprise surprise, we’ve got another one! 

These things are part of a cycle we continually go through.  On top of that, manufacturing has special challenges because of labour costs – so the cheapest place to make things is normally where the cheap labour is.  No real surprise then that so many companies have moved production to China.  But these things have been a long time coming – there are forecasts of this happening from over 10 years ago. 

But what has this guy done since then?  Ignored the forecasts?  Carried on with his own way regardless, hoping the world will stick with him?  He could have outsourced his manufacture, or moved his factory overseas, or heavily automated to reduce labour costs.  Lots of companies own factories abroad, in China, Latvia, Lithuania and so on, with lower costs and high quality education, it’s not difficult to set up a great office or factory overseas. 

You can even make overseas production a feature of selling – one of my clients did this for engineering goods and got an incredible response from a direct mail letter.

Smart businesses keep themselves lean and fit and are able to react quickly and positively to market conditions.  Slow-moving businesses get caught in the belief that it’s easy to succeed – just keep turning the handle, never doing anything different or special.

Then when business goes downhill, blame the government, or the state of the economy, and you’re off the hook.  "Oh, business is going down the pan, the economy is to blame." 

What a cop-out!  Can you imagine that spirit in the Second World War?  "They’ve bombed my house, I’m making a white flag now, the Germans have won, Churchill should have saved my town, but he’s useless!".  What a load of twaddle!

It’s great to blame somebody or something else for all your problems, because it absolves you of responsibility for it personally.  But how does it help you?  You spend energy on bitterness and moaning, rather than taking responsibility for your situation and doing something about it.  You’re far better off spending your energy and time figuring out what you CAN do to change things for the better.

How did a company like Phones 4 U, John Caudwell’s old business, manage to keep doubling its sales every year, even through the recession of the early 90’s?  He worked twice as hard, that’s how.  And not just harder, but smarter.

In fact, whenever you hear somebody saying, "business is horrible, it’s the economy", ask them what they’re doing different to make their business more competitive.  And don’t let them tell you there’s nothing that can be done, that they are a victim of circumstance, because there’s a whole load of things you can do differently…

  • Get rid of low performing staff to protect the rest of your business
  • Change the way you advertise or promote to increase leads
  • Hold a sale of old or slow-selling stock
  • Renegotiate rent
  • Fix cash flow problems with longer terms from suppliers and sharper collection of invoices

That’s just five specific items – there is so much more that can be done.  I’ve got a mortgage broker client who’s still recruiting brokers and growing at the moment, despite the awful lending conditions.  In this economy, how on earth can they do it?  Because they took actions fast and early, then kept a focus on their numbers.

Yes, business is tougher at the moment, but just doing the same things and hoping for different results is crazy.  Business has been pretty easy for the past 10 years, so if you were only doing OK before, you need to change what you’re doing, quickly, because it won’t be good enough in a recession.

If your business keeps doing the same it’s always done, you’ll almost certainly see a drop in sales and you might end up going bust.  On the other hand, if you act now and make changes for the better, you will give yourself a better than average chance of pulling away from the pack.  You might even double your sales like Caudwell did through the 90’s recession.

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