5 ways to protect your business in a slowing economy

When business is robust, it’s easy to forget what it was like when times weren’t so good. And in Year 10 of a growing economy, it’s human nature to tackle opportunities in front of us, rather than the harder, more depressing task of preparing for darker times.

Combined with traditional business cycles, are elections and the time period before them. Uncertainty is a killer and knowing who will hold the levels of power can impact organizational decisions.

Companies that hold back on capital spending or other investments affects our business via fewer background checks. Orders received today could be the consequence of an investment decision made two years ago. When decisions change or are postponed, impact is quickly felt in our space.

So now is exactly the time to begin planning. CRA’s who are prepared are also better prepared to maintain profit margins. And those who do it early are better positioned to take business from competitors who haven’t. This is your canary in the coal mine moment.

Below are 5 low cost, low tech and high impact solutions.

1.    Do your account reviews!

When business conditions change, employers recalibrate to get through the cycle. They do what I call the “3 R’s.”

They review their program, asking whether their current products and services are necessary.

They refresh their program. Are there new products or services since their last review that better account for a changing regulatory landscape?

Lastly, they reduce costs. And that starts with either calling you or taking up that competitor on that demo or quick coffee meeting they keep offering.

Why do account reviews matter? Because when your client does the “3 R’s,” do you want their last interaction with you to have been a lunch meeting three years ago or the account review three months ago that covered these items listed here (login required).

After all, your account review demonstrates you’re thinking about them without being called in for their “account review.” A much scarier proposition.

And when you get to them first, you’re the one suggesting new products and services they may benefit from? 30 day trials are great opportunities here.

As a bonus, an increase in spend today helps offset a drop in orders next year. If revenue is equal, I’d rather sell fewer, bigger but more profitable screens than more, smaller, but less profitable ones.

2.    Plan for a changing Ops environment

Unemployment just hit 3.5%. It’s not going much lower. Pretty much every employee who leave is replaced, and that’s a background check order. In tough times, companies may choose not to replace.

So 3.5% means we're at the top of the “replace” cycle. Low unemployment can mean 2 background checks. A new job created + a replacement screen. Higher unemployment can means 0 background checks. No new job created and no replacement hire if someone leaves.

How do you run your business when volume drops? What changes do you need to make? What ones don’t you need to make? Learn how to do this well right here.

3.    Evaluate how you spend your time

It’s the only thing we can’t get back. We can’t buy or build a solution for it. The choices we make today dictate what we accomplish tomorrow.

For smaller shops, the best salesperson may be the best compliance person and the best public records specialist. Sales cycles aren’t quick. If you’re spending all your time assembling consumer reports, your sales funnel will be lighter, and when your volume drops 9% it will take longer to claw it back.

And CRA’s with smaller sales funnels take more compliance chances. Without a lot of prospects in the mix, it’s harder to say no to a current client who wants a grey area process.

Thus, you need to balance working ON the business with working IN the business. I’m a big believer that you should do only the things that you can do. Everything else, train someone on your staff or find a trusted friend in the industry who specializes in it. Learn how to do this well right here.

4.    Don’t “Yes” yourselves into a corner

Too many CRA’s have multiple processes for the same product, configured by client preference. I’m extremely client focused, but a CRA doesn’t need to worry about executing 4 different kinds of employment verification and trying to manage consistency amongst a 12 member team.

We often assume flexibility means acquiescence, so we contort ourselves without having the courage to pick up the phone. What a client needs and what they ask for can be different things. I promise, clients won’t leave just because you tried to dissuade them from a request that doesn’t provide them value and increases complexity for you.

When you show why their (non-expert) request won’t really improve their hiring process, you can better streamline your team and deliver on what they really want. These are bold solutions that will let you operate a tighter ship when you need to tighten your belt. Learn how to do this well right here.

5.    Evaluate your costs

Empires aren’t built by ripping up vendor networks or beating them up on price. But it is about making sure you’re in line with a changing industry. Learn how to do this well right here.

I work with a lot of CRA’s who feel they’re in a good place, only to discover once we look under the hood they’re paying 2009 prices. But beyond paying too much, it affects how and what you can sell.

Surprisingly, vendors don’t really want to take every last dime either. If you can sell more, keep more or acquire a specific piece of business with a little discount, providers will help you better position yourself. They’d rather get 90% of a new piece of business from you than 0%.

And if you engage in those consultative, collaborative conversations now, you’ll have more luck compared to a downturn, when every CRA is calling asking for the same thing!

The best part about these 5 low tech, low cost and high impact solutions? Preparing for a changing environment doesn’t require anything other than planning and execution. The old adage, “the best things in life are free” just might be true.

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Kevin Bachman is The CRA Doctor, a background check executive providing financial, strategic and operational counsel to owners and senior management. He also helps employers create optimal screening programs and find the right CRA to fit their needs and budget. He is also available for speaking engagements and onsite training sessions. Kevin can be reached at [email protected] or 216-509-2108.