While there appear to be signs that our economy is making the turn back into positive territory, we are just not there yet and still have much work to do in the coming months and years ahead. However, unlike market declines or crashes that seem to take us by surprise, market recoveries can be predicted and tracked. This provides business owners with tremendous foresight on how to position their businesses to take advantage of the opportunities that recovering markets present.
So, the question becomes, what can a business do now, in a down economy, to prepare itself for the opportunities that will materialize as our economy begins to strengthen again?
It all begins with how you think about your business and its place in the future economy.
(Keep in mind that as we move into a recovery, the economy, its major players, its dominating industries and the way businesses interact with it, will look nothing like the economy we just left or had prior to the market decline).
A friend of mine, who just happens to own and run a very successful business, once told me;
Imagine a fly continuously flying into a window - over and over again. On the other side of the window, the fly can see his goal - freedom. But, it can't figure out how to obtain it. So, it keeps flying into the window. Eventually, the fly will tire as its resources run low, then falter and die. Now, had the fly simply turned around, it would have seen an open door on the other side of the room; an unabated path to the freedom it so desperately sought.
The same is true for business. There are opportunities in every market and in every circumstance. You just have to set your mind to look for these growth opportunities. Thus, turn around and keep looking in all directions.
All businesses are different and each will face their own paths to success. But, the following lists five tasks businesses can do in starting to look for growth opportunities.
The goal here is not to become an overnight success but to better position your business for the new and exciting times that lay ahead.
Number 1: Some of your competitors will be downsizing or closing their doors if they have not done so already. Some will not make the economic turn (recovery) even though we can now see the light at the end of the tunnel. Further, some will just not fit the new economy and will lack the mental ability to adapt to it and its nuances.
Think about ways that your business can pick up their customers. Their customers will still be in the market for goods and services and why should it not be your business that picks them up? Get your message out to them citing that you can and will service their needs as well as cite that your business is not going anywhere. Regardless of the market, people and businesses will still need goods and services and they will still continue to buy. The question becomes, who will they buy from? Your answer should be you!
Number 2: As your competitors downsize or close their doors, the talent pool for your industry increases. This is a great time to pick up new, recently laid-off employees that have both superior talent and skills as well as knowledge about your industry and local markets. This is like having your cake and eating it to. First, you get employees who know your industry inside and out and, second, you don't have to realize huge training costs while ramping them up. These employees would hit the ground running and could possibly help with acquiring new customers (as outlined above in number 1) as they already know and have established relationships with these new, targeted customers.
Number 3: Renegotiate costs and trim the fat. Do not just cut costs for the sake of cutting costs. Cut costs to better position your business for the future. This is a great time to renegotiate service contracts with your vendors and suppliers. Go through your income statement item by item to see if there are costs that can be restructured. Start inside your business - i.e. your phone and internet services, office supplies, rent, equipment leases, dues and subscriptions, etc, etc, etc. Look for ways to not just reduce these, but to position them more favorably for your firm (e.g. get more for the same costs).
Then look outside your company. Your marketing and advertising, inventory purchases or trade goods and service purchases, shipping or any and all overhead cost items. Look to renegotiate with these vendors and suppliers. They are also feeling the pinch in this economy and I can guarantee you that they would rather keep your business at a lower rate than lose you all together. Should one of these partners not want to renegotiate, then this is a great time to shop around for a new vendor who is willing to help you as you help them (a true partnership - what business should be about).
Lastly, think long-term. When you renegotiate try to create the best deal with the longest term possible. Not only will you get a better deal but this will shows your new partner that you are in this for the long haul. Now, who does not want to work with a business like that?
The goal here is to position your business to be lean and mean as we enter this recovery. There will be tremendous opportunities as we emerge and only those prepared will be in a position to capitalize. Think about a professional football player. He does not just show up for the first game of the season and play to his full potential. He spends the entire off season preparing for the season to begin. Think about this current market decline as your off season and get prepared.
Number 4: Go after the clients or jobs that you avoided before; be it from a lack of funds, a lack of scale, or just plain fear. Go after these jobs or clients with gusto. Show them that you are the company that will not fail and that can and will meet their needs, timely and cost effectively. The goal here is not to just get more, bigger business, but to potentially steal clients away from struggling competitors; competitors whose customers may already be worried about their long-term viability. The idea is to get the customers you could not get in the past and to do it before someone else does.
Thus, show that you can both do the job today and that you will be here tomorrow to continue servicing them. Then, as the economy begins to pick up, you are already their go to company. Having these customers in your pocket can further leverage more, bigger business when the recovery hits full swing. Most big businesses or customers watch who their competitions are using to service their needs.
Number 5: Not sure if you can pay for any of this? First, think about the cost savings you can achieve by renegotiating with your vendors and suppliers. Use these savings to grow your business. Second, keep in mind, that if you want to cultivate your business as the economy begins to grow again, you just simply have to find a way to finance that growth. A little risk now will pay off in huge dividends - this is what defines an entrepreneur.
Just like the fly, instead of continuously seeking out the same financing vehicles, many that just do not fit your business, turn around and look for new funding opportunities; like asset based financing, customer financing, sale- lease or buy back programs or even non-bank or non-financial institution products and services.
The bottom line is to change your mentality and quit focusing on survival, quit flying into the window and start to look for the growth opportunities that will abound as the economy begins to make positive strides. Look for opportunities that grow your business today and that will also position you at the head of the class when the market turns around.
If you do not position your business today for what is coming tomorrow you will simply miss out (meaning one of your remaining competitors will fill that void and reap the benefits). If you think you can wait until we are actually in a full blown recovery, then think again. You will only spend your time and energy trying to catch up and not take advantage.
The recover will come and those that are preparing today to position themselves within it will be the ones that lead our new economy. The question: will your business be a future leader or follower?
About the Author:
Joseph Lizio holds a MBA in Finance and Entrepreneurship, is the founder of Business Money Today, has a strong commercial lending background and is regarded as an expert in business and finance.