It seems like on a daily basis now we are hit with a barrage of bad economic news. Although most experts do not expect a true double-dip recession to hit, many sectors of the economy have certainly slowed. Given this reality, we thought it might be a good idea to share some sage advice we came across recently on how to survive an economic slowdown. Both Thor Harris, president of the PR firm Percepture, and Carol Tice of Entrepreneur.com have come up with a few great ideas on this topic.
Expand Your Market Share
First, one of the best things you can do, if you can afford it, is to acquire any of your floundering competitors. This does two things: eliminates competition and builds your market share. This will effectively position you for longer-term growth once the economy fully recovers. Of course, this is predicated upon your ability to have the capital to make such an acquisition and your ability to handle the risk associated with it. It also requires a full understanding of the acquisition process and how to effectively acquire at the right price.
Of course, there are other ways to expand your market share. For example, if you have customer concentration issues (i.e. a single customer generating a majority of revenue), you can expand your market share by going into ancillary markets or expand into new geographies. During economic slowdowns, too many business owners take on the “bunker mentality” and hunker down hoping for better times. Take advantage of your competitors when they do this and expand your share of the market.
Talk To Your Customers
Another great idea is to review your products/and services to ensure that what you are selling is really meeting the needs of your clients. The best way to determine this is to simply ask them. An email survey is a great method to use. Another technique is to pick your 10 biggest clients and take each one to lunch to find out if what you are offering is fully meeting their needs. If you determine that your products/services are lacking in any area, revise what you are offering—you’ll be improving your product and fostering good will with your customers at the same time.
Share Leads and Request Referrals
Seeking out new alliances and expanding your networking are also great ideas to pursue during difficult times like these. One way to do this is to ask your attorney, accountant and any other business professionals you use to refer business to you. Let them know that you will do the same for them. Also consider expanding your professional networking. Most cities now have dozens of business-related networking groups that are designed for professionals and entrepreneurs to connect and develop new relationships. These can be inexpensive ways of developing new business and sources of revenue.
Enhance Your Brand Awareness
If you can afford it, consider expanding your advertising and marketing. One of the first things your competitors will cut in an economic downturn is their advertising. This gives you a great opportunity to expand yours. Not only will this better cement your brand in the minds of your customers, chances are good that advertising rates will be dropping, since they usually do when advertising declines. This may even allow you to gain better visibility at a lower overall cost. Of course, this, too, is predicated on your ability to afford it. If you can, though, it is a great way to enhance your brand awareness.
Focus on Revenue-Generating Activities, Not More Activity
Most importantly, according to Mr. Harris: Don’t burn out. Most business owners are overworked and sleep-deprived during good economic times. When the economy slows, you usually push yourself even harder. The old saying is appropriate here: Work smarter, not harder! Although this is a worn out cliché, the meaning behind it is clear – more activity isn’t necessarily more beneficial to your business (or your health).
Work on revenue-generating activities. As we have discussed before, any task you are doing that is not producing revenue should be delegated to one of your employees. Tasks that you do not do well or jobs that you are not well suited for (like accounting, HR, administration) should be, if at all possible, assigned to someone whose skills better line up with the responsibilities. This will then allow you to use your time to focus on revenue-generating, economic-malaise-beating activities.
Position Your Company To Be Buyer Ready
Buyers are looking for companies that are using all of these techniques right now. A “buyer ready” business is a business that effectively plans for and reacts to economic changes. If you are considering the sale of your company in the next few years, the steps you take right now will better position you to be attractive to buyers. Conversely, if you stay the course and hope that the economy improves so you can eventually sell your company, you will not be as attractive to buyers (and you may not even be in business).
Buyers want to see proactive businesses that are always looking for ways to improve. If you are interested in learning more about this, you will find Generational Equity’s free whitepaper, Building And Exiting A Desirable Business, to be really helpful. It is full of great ideas about effectively positioning your company to be buyer ready.
Bottom Line
You can survive and possibly even thrive during this period of economic uncertainty. Be wise and proactive but, most importantly, don’t wait hoping for something good to happen. Make something good happen.
We would like to hear from you – what ideas have you come up with to thrive during this time? What new steps have you implemented to better position your company?
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