Innovation

All you need is tough love

Written by Brian Scudamore

It’s the question all entrepreneurs are asking themselves right now: Does my business have what it takes to succeed through a big downturn? Part of the answer lies in this quotation I heard recently: “When times are good, anyone can win. When times are tough, the smartest and most proactive win.” In other words, when the going gets tough, the tough get going. It’s a clichéd maxim, but one I believe wholeheartedly: smart companies will use these times not only to take a closer look at their strategy, people and processes, but also to make the hard decisions that will make their companies stronger down the road. So I’ve been giving my own business some tough love.

In September, I reached out to all our franchise partners, scheduling calls with each of the more than 300 1-800-GOT-JUNK? operators who made themselves available to chat. With each call, I encountered the same, common message: it’s nasty out there. But my call with Alan Remer, who owns two of our franchises in Philadelphia and one in Orlando, stood out in my mind. He has certainly felt the shift in the economy. But, unlike the many franchise partners who told me they are “remaining optimistic,” Alan said he is using today’s economic challenges to make changes he should have made a year ago.

Alan’s introspection and honesty impressed me. “I’m glad the recession is here,” he said. “I almost didn’t think it was fair to call myself a businessman until now. I’ve learned so much in this tough economy. Before now, it was almost too easy. [The slowdown] has forced me to make tough decisions that have helped me become more profitable€¦[such as] cleaning up my team, getting rid of excess infrastructure and focusing on opportunities for increased efficiencies.” While he has made some cuts to improve profitability, he has not reduced his marketing. He knows there’s still plenty of room to grow his top line while focusing on his bottom line. Alan also recognizes that the time to market more aggressively is when competitors are reducing their own marketing spend.

Our conversation made me reflect on my own situation. Over 80% of our revenue comes from the U.S., so when the Canadian dollar rose to US$1.10, we had to cut overhead — including 22 people. The moves were hard on the company and its culture, but I know from experience that waiting longer would have made the repercussions even worse. We had too many employees and a few performance issues that we simply hadn’t gotten around to addressing. Thankfully, the soaring loonie forced us to take action. Still, it’s better to be proactive than reactive. In our rush to get leaner, we probably made some avoidable mistakes. And making changes sooner would have protected more of our bottom line.

But what tough love does my business still need? The current opportunity for 1-800-GOT-JUNK? is to get closer to our customers. That means developing a better understanding of our franchise partners’ individual goals and the obstacles they must overcome to reach those objectives. With the end consumer, it means knowing more about their junk-removal needs. Are there aspects of our existing service that we can improve? Are there additional services that we can provide to clients?

Being closer to the customer will allow us, over time, to improve both the profitability of our franchise partners and the service they deliver to their customers. But getting there requires a full restructuring of the support structure we took a decade to create. That includes replacing the people who lack the skills to support our franchise partners’ next level of growth and determining which employees should be physically relocated so that they can spend more time on our customers’ home turf. We took a big step like this recently, when our leadership team spent two weeks on a six-city tour, visiting almost half of our franchise partners. (Formerly, the operators would have visited us in Vancouver.) It cost us more money and more time out of the office, but it was a worthwhile investment in a more effective culture.

We’re also increasing our investment in sales and marketing by adding regional sales managers to help drive commercial business. That was a really tough decision, because it entails a significant outlay of additional cash when most companies are cutting back. All told, “getting closer to the customer” is a huge step in uncertain times. But it’s the right thing for the brand, and it will make us much stronger in the long run.

Tough decisions are never fun to make, but that’s where the learning and growth comes from. I believe growth and improvement are a direct result of making tough yet smart decisions. I’ve seen the people and leadership at 1-800-GOT-JUNK? grow more in these times of challenge than I ever have in years prior. The tough decisions will always be there — and, again, they’re always easier to make from a proactive position rather than a reactive one.

Which tough decisions do you need to make? I challenge you to make them sooner rather than later. Not just because this is the most challenging economic time of our lives, but because it’s the right thing for your business.

Originally appeared on PROFITguide.com