A down economy can be the best time to take your business to new heights. It seems counterintuitive, but it happens in every down cycle. The businesses that take advantage of changes in the market emerge stronger than their competitors,and benefit more from the upturn that follows.
In his 35-plus years as a Texas banker, Nathan Robinett, president of Frost’s Dallas region, has seen it happen time and again. Now, as he helps his customers navigate through the trough, he also counsels them to see that lean times often present unique opportunities for those who
recognize and seize them.
Q. How do you find opportunities in down cycles?
Seeing opportunity begins with understanding the basics of how cycles work. A seminal study about cycles commissioned during the Great Depression found cyclical patterns in almost everything from animal populations to music. Commodities, wars, real estate, and pricing are all driven by both long- and short-term cycles.
In every up cycle, there are those who think we’ve become smart enough to avoid a downturn. And in every downturn, there are those who understand enough about the history of economic cycles to spend their time positioning their companies to benefit from the coming recovery by adopting strategies that others employ only in an up market.
Q. Where’s the best place to start?
Marketing and personnel are two key areas in which acting counter-cyclically can be a winning strategy.
In down times, advertising and marketing are often the first items to come out of a company’s budget. While it seems less painful than other options, eliminating marketing can directly impact your company’s profits and prospects.
In good times, companies market to distinguish themselves to consumers looking to buy. In bad times, companies need to convince customers they need a particular product or service. By marketing in a down cycle, you’ll not only reach those people willing to buy now, but you’ll plant seeds to attract those who’ll start spending once the economy picks up.
Look at your staffing needs, too. You might not have enough work to go around right now, but when the economy picks up, you’ll need qualified individuals who can carry the load. High unemployment typically means some talented people are looking for work. Even if you can’t hire right now, interview to see who’s available and who may fit your company when the need arises.
Also, don’t limit your job search to the outside. Look within your company. Gauge who might be able to take on expanded roles or new positions. Make sure you’re evaluating your employees on both their current performance and future capabilities.
Q. Are there other things to consider?
Consider stocking up—if the price is right.
It’s important to manage inventory in a down market, especially if your product has a short shelf life. But you want to be prepared to meet increased customer demand when the market rebounds. Plus, you can likely obtain a better price and/or terms from suppliers in a down market.
Q. What else?
Remind your employees they’re important to you and that you can ride out the storm together. It’s important to foster loyalty so that key employees won’t leave your company to pursue other opportunities.
Help your employees understand that tough times are part of a cycle, and show them you’re positioning the company for greater success when the upswing comes.
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