How do you lead a small-sized company (8 to 10 permanant employees on average) in times of economic downturn … when there is very little work in the market and too many competitors … and it has actually come to a point that you company is without any job in hand, you are qouting a lot of projects every month but somehow always qoute higher prices than your competitors … your employees’ shoulders are falling and you are paying their salaries from your own pocket?
How do you survive these times? Is this a time to explore other venues or just to concentrate on your company’s area of expertise and hope for the best?
Wane: I would need ot know the following things. Type of industry, cash flow for 2 Q's and employee performance.
Assuming yours is a tech firm, with consultants and some perm employees + Sales + SGA. In that case, you first want to take risks on the supply side. I would make all billable folks as consultants or offer a 20-25% reduction in pay. SOmetimes you might have to do both. Secondly, I would look at cost reductions around SGA, starting with variable as well as fixed costs. Thirdly, I would retrench my offerings into what makes the most compelling for the market, where I have a USP and also divest assets that are NPA, people and infra. Have all focus go towards BD.
Also, you pricing seems to dictate that your SGA is quite high...if you are getting priced out then you have to reduce that to be competitive. You can also reduce your GPM and hope that in delivery of projects you can ensure a healthier NPM.