Building Business in a Recession
Author: Kingsford Consulting
People behave in contradictory ways during times of stress-like during a recession. Too many companies become paralyzed by indecision. Recessions are part of business cycles, just like growth periods. Thus, managing during a recession is part of the job perhaps the most important part. But what should be done differently? The answer is a lot, but not everything. If you have managed through recessions before, you may remember what to do, assuming you did the right things. Fear of the unknown was natural. How bad will it get? How long with it last? What should we do? Consider my story about McRobert Springs: I realized that some of our large competitors were struggling to remain profitable on the low volume orders and were cutting back on marketing and sales. The strategy I put in place was to build relationships with the buyers at each of the major manufacturers of Class 8 trucks. I traveled all over North America and pitched them on our expertise using a glossy brochure (its amazing what some great lighting and a good photographer can do with an ancient manufacturing plant) and our quality record. I asked them for an opportunity to bid on their short run, hard to make springs. Our cost structure let us make huge profits and still undercut the competition. As the economy started to expand again, those short runs got larger and we replaced some of our big competitors, who failed. Within a short period of time, we were running three shifts and competing on delivery and quality. Our new clients included Mack, Freightliner, Volvo, WesternStar, Kenworth, Peterbuilt, Fruehauf, Trailmobile and Midas. The lessons learned in those days are very applicable today. No matter what business you are in you should be: Maintaining or increasing your market awareness activities let everyone know how good you are and that you keen to help Approaching the largest players in your market start building a relationship with them while their current suppliers are suffering Identify entry points Looking for paradigm shifts in your market. These can be driven by technology, demographics and other global factors. The automotive industry is in the midst of huge change as it shifts from a fossil fuel based production orientation to a renewable, energy based service industry. The cost of health care will hit a wall very soon what will happen how can you participate? Computing power and resources will shift into the cloud how should you position yourself? Getting through a recession is like getting in shape after gaining weight. Exercise make the right moves. Eat properly feast on competitors by selling the best products, to the best customers. And dont quit when the going gets hard. Running a business is supposed to be hard; if it werent, everybody would be doing it. Now get out there and dont just survive, attack and dominate! Its a lot more fun than the alternative. These fears are normal when facing unpleasant events of unknown severity and duration. The biggest mistake you can make is to act too slowly, but its also important to act with carefully considered intent. The second biggest mistake is denial: This cant be happening; it cant get any worse. Yes, it is, it can and it probably will. The third biggest mistake is to become defensive and reactive. When that happens, you will always be a step behind the competition-and a step late in meeting your customers needs. The secret is to take the right steps to break new ground and dominate the competition and when the economy recovers, not only will you have survived, youll have stronger revenues and a much larger share of the market. Published in January 2009. http://kingsfordconsulting.ca/?p=175About the Author:
Kingsford Consulting Ltd. is a Strategy and Business Development firm that provides business planning, market research and strategy development services.
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