Understand “customers’ customers” in light of Eurozone problems
With continuing economic problems affecting the Eurozone, companies need to gain a better understanding of how this could impact on their business.
It’s thought the financial worries gripping countries such as Greece, Spain and Portugal could tip the UK back into recession because the EU is Britain’s main trading partner.
While this should not discourage companies from making investment decisions, it’s wise to be aware how this may affect your business, particularly as the knock-on effects on UK firms may not just be limited to those that trade internationally.
Businesses need to have a deep understanding of their customer base, and the factors in the supply chain that might affect them in turn, to plan effectively for any sudden drop in orders.
We were recently working with a company that had seen its sales decline rapidly over a three month period. While they did not deal directly with overseas companies, they found that some of their customers’ customers higher up the supply chain had been impacted by the Eurozone problems. This had resulted in a reduction in orders that led to a domino effect on the companies lower down.
This shows how sometimes it’s those customers two or three times removed from a business that can be critical to its success, particularly in the manufacturing sector. Of course, there’s not much that individual business owners can do about the problems in the Eurozone, but at least by understanding how they may be affected, they can plan effectively to deal with that eventuality.
Companies can be better prepared by limiting their exposure to ‘at risk’ sectors and developing new products and services to broaden their customer base.