This could be the worst of times, or it could well be the best of times.  Whatever they are, we are definitely living in interesting, if not tumultuous times.  China, the fasted growing large economy for the past 20 years now face possible recession, with growth rates decreasing from Q3 2008 right till a possible Q2 2009.  Factories are closing and many people are being laid off.  Those being laid off include shop floor workers as well as senior management.

     Elsewhere in the world, the situation isn't any better at all.  In some developed countries, growth rates for 2008 are expected to be half of 2007, and 2009 half of 2008.  In some cases, some countries face the possibility of negative growth.

     From the perspective of businesses, many companies face the compounded woes of:

• Major reduction in orders and selling prices from key accounts for as much as 75%;

• Major adverse impact on cash flow with banks unwilling to lend, creditors chasing for early payments and debtors extending payment terms;

• Major decline in staff morale as those who are not being laid off still hasn't seen the light to guide them out of this darkness

     Some call it the financial crisis, others name it an economic downturn, and some others call it Great Depression 2.0.  However, Ma Yun, CEO of Alibaba.com term this period as the economic "winter", and went on to add that the purpose of summer is to prepare for winter.   

     For those of us who are not well-prepared in "summer", the silver lining amidst the dark clouds is that the purpose of winter is also to prepare for spring and summer.  Hence, if you survive this economic downturn, you are very much likely to emerge stronger.  Furthermore, as some of your competitors may be eliminated before the "winter" is over, and that will be the time to pick up their  customers and talented staff too.

Surviving the Winter

    If you want to make it till spring and summer, you will have to survive winter first.  To do that, you have to be aware of your key vulnerable areas, and stay away from harm.

    In an economic "winter", here are some common areas that will affect businesses most:

• Cash flow, i.e. do you have enough cash to pay your bills, especially when sales revenue is decreasing, and it takes a longer time to collect payment;

• Sales revenue, i.e. how badly will your sales revenue be affected and what are the chances of cancelled or postponed orders;

• Key accounts, i.e. what will be some of the changes in your key accounts' buying behaviour that you need to be aware of;

• Suppliers, i.e. will your suppliers be put out of business, or will they be demanding faster payments from you;

• Morale, i.e. can your staff see the brightness at the end of this "winter" and are willing to work hard towards it, or are they simply demoralised and waiting for their retrenchment benefits

    Without any doubt, the biggest challenge is that of cash flow, and that is the main reason why we are seeing so many orders being cancelled or postponed.  Our customers need to protect their cash flow too, and hence, they are cancelling their purchases or postponing till a time when their cash flow is expected to improve.

     Even when you do get the orders, customers may take a longer time than usual to pay you.  Hopefully, none of them go out of business BEFORE they pay you!

     Protecting the cash flow in this case has become the top priority for most businesses.  However, the question is, what are the costs that you'd have to cut, and what are those that you'd have to commit.  More importantly, how can you can spend less AND get better results.

     For most sales organisations, the biggest challenge will be to balance between the lengthening of payment cycles, the reduction of sales orders and the upkeep of necessary expenses (esp. sales commissions).  Here are some tips on how to make that balance:

• Let the customer choose between steep discounts and pay by cash, or no discounts and pay by credit;

• Rather lose a customer than to extend credit to dubious ones;

• Pay sales commissions based on gross margins, AND only when your customers have paid in full, etc.

Firing Up in Winter

     Does it mean that, in this economic "winter", it will be futile to conduct any sales activity?

    Fortunately not.  All you need to know is that the sales process will take a different twist during this "winter".  You will find that:

• It will take a lot longer for new customers to make buying decisions than compared to those good times; and

• Your current customers will be a lot more demanding on the sales person in tough times

    Even when you are faced with a much longer sales cycle, that does not mean you should stop prospecting for new customers.  Many high-performing sales people are demoralised by the fact that it may take twice as much effort to get half as much results.

     As for your current customers, they are much more likely to demand more value for every dollar they pay you.  Servicing and retaining your current customers will be tougher.  Some account managers may also be demoralised by the increased difficulty to manage their accounts.  

     Here are some ideas on how you can tackle the situation:

• Let your staff see the brightness of the future, and that to survive this "winter", they will have to work twice as hard;

• Those sales people that are still unwilling to commit to the extra work may have to be let go, or else they may adversely affect the others;

• In an economic "winter", customers are looking for solutions to help them save money more than ever, and perhaps you can position your products and services as such;

• When customers are simply not willing to spend any money, take the time to gain insights about those customers

     In a research on what customers expect of sales people conducted with 80,000 customers conducted over 14 years by HR Chally, one of the key demands of customers is "You must understand our business".  And there's no better time to gain this customer insight when your customers have more time to talk to you now.  Instead of using the old sales pitch, go and make sincere conversations with your customers and understand their world better.

     In the book "The Game Changer", the key to P&G's success is to find out how their end-customers use their products.  They even send their staff to live with some of their end-customers so as to uncover hidden needs that these customers don't even know existed. 

     While you may not have the resources and budget at the magnitude of P&G's, there are many things to find out about your customers as to how they can save operational costs.  You can:

• Send sales people and engineers to pop by your customers' offices or plants and see how they use your products and solutions;

• Brainstorm with customers if there are more ways to deliver better results, even when you don't have the products or solution yet; 

• Find out from as many levels and as many contacts in the customers' organisation what is the one thing you can do to help them ride out this cold "winter".

     Even in good times, most customers will feel "pain" if they spend unnecessary money.  If an economic "winter", spending money is painful, period.  However, if you can convince them that it will be more painful if they don't do business with you, than it is to spend the money, they may just buy from you.  What you need to do is to find their pain areas, and suggest appropriate solutions.

    Of course, all these are easier said than done.  It will be easier if you have already built a significant level of trust with multiple levels and contact people in the organisations.  If you haven't done so already, start building those trust now.  After all, expect your customers to restructure, and some old relationships may be expiring real soon.

     This "winter" may be real cold, and may even be as long as 3 years by some estimates.  However, if you are willing to put in the right effort, you can still survive or even thrive in such situations.