Navigating the Current Harsh Environment

As a corporate executive, I have operated in difficult external operating environments, namely:

• Price controls
• Foreign exchange shortages
• Shortages of inputs such as spares and fuel
• Skills shortages arising from brain drain
• And yes the hyper-inflationary environment

Each situation required that we adapted our strategies and programs. One of my executives coined these survival strategies and we accepted we were in survival mode; we had to survive these conditions.

The environment remains difficult and is now characterized by a debilitating liquidity crunch, whose results are a slow down in economic activity, low disposable incomes and a debt crunch. 

To survive this period, organisations must accept this is an extremely difficult environment and convince their boards, shareholders and stakeholders that the key target is not necessarily growth and high returns but survival. Each organisation must define what it's survival is, for some it will be a break even situation, for others matching prior year's result, etc. 

Whatever the case maybe, they are some common strategies that must be adopted by most organisations. These include:

• Preserving cash - review costs, working capital levels and capex programs
• Operate on cash basis - both on sales and your own costs
• Reduce debt/avoid debt - especially short term debt
• Rehabilitate debtors unable to service their debts - litigation is not necessarily the solution ( it's a crunch, dah!)
• Focus on profitable markets, forget market share as this can be costly
• Forget capacity utilisation ( run alternating weeks/months if you have to - obviously taking startup costs into account )
• Improve your efficiencies - in short do more with less
• Turn your executive into a crisis management team for this is indeed a crisis
• Go after the proverbial low hanging fruit
• Develop alternative revenue streams
• Look for external markets, regionally and internationally
• Stick together - this is no time for the blame game

Whatever strategies you adopt, be clear of one thing, avoid a loss situation, so cut costs (not just cost reduction) operate lean and look after your key skills.

All the best!

Please leave comments below on what works (worked) for you, I would love to hear from you!!