When It Feels Like A Recession
So, here we are in the middle of what seems like a recession. I say "seems like" because as of this writing, the arrow on the recession-o-meter has not officially dipped below the red line, which everybody knows by now is two consecutive quarters of negative growth. Someone once said if your neighbor gets laid off, you're in a recession. But if you get laid off, it's a depression. Regardless of what we call it, whatever it is that we have, at least in my career, is unprecedented if only in it's abrupt arrival. The jury is pretty much in. During the fourth quarter 2000, somebody slammed on the brakes of our Indy car, U.S. economy, which had been accelerating to dizzying speeds since 1983. And while technically we haven't actually had a wreck yet - a recession - being slammed against the dashboard makes it seem like one.
What A Difference A Quarter - Or A Day - Makes
Economies go up, and they go down: Newton's law of gravity is very much in evidence in the marketplace. It's the way of things. But in contrast to the pace of growth in recent years, the economic deceleration in Q4 2000 was more than negative, it was frightening.
One member of my Brain Trust owns a 300-employee international firm. Recently he told my audience that one day in October 2000, he got calls from three large customers saying that not only were they not going to proceed with planned future projects, they didn't know when - or if - they would be able to pay current invoices. Another friend said during Q4, "it was as if my phones had been disconnected."
What's In The Cards?
When is the economy going to pick up? Based on what most of the economists in my Brain Trust have said on my show, it's looking more and more like recovery won't come before 2002, and perhaps well into that year.
You've probably heard economists talk about V and U shaped recoveries. A V shaped recovery means the economy didn't stay long at the bottom, and a U means the economy bottomed and stayed there for a while. I think we're experiencing what I call a check-mark recovery: A vertical drop (in Q4), followed by a gradually rising line.
Offense Or Defense?
I think we are headed toward recovery, but there isn't going to be a quick fix. Therefore, we have to make our business plans around that reality. When a national economic downturn occurs, the defensive reaction of looking inward to cut operating expenses is natural, and for the most part, appropriate. But unfortunately, many business owners not only look inward, they operate inwardly. They are intimidated by the negative economic news, and fail to take advantage of some critical offensive opportunities.
My friend and Brain Trust member, Paul Goldner, has published a white paper called Six Ways To Survive an Economic Downturn, and we discussed his ideas on my show recently. The following are some bullet points from Paul's paper about playing offense during tough economic times, followed by my thoughts.
Add value, add value, and add more value.
It's important to realize that the primary reasons our customers do business with us is not because of the stuff we sell, and certainly not our prices. It's mostly because of the value we add in the delivery of our stuff: We're more convenient, we move quickly, we save them time, etc.
Adding value is always important, but it's essential during an economic downturn. If you want to watch your sales numbers slide, wait on customers to ask for help. But if you want to give your customers the maximum opportunity to buy your stuff, contact them, preferably in person, and ask them what their greatest challenges are. Then come up with new ways to add value to the relationship that helps your customers meet those challenges.
Anybody can be successful when times are good. If you want to survive, and even thrive in a recession, do what Paul says: add value, add value, and then add more value.
Increase your level of new business activity.
If adding value for existing customers is a good idea, why not make the same approach to new prospects? I especially recommend focusing on those prospects who have been loyal to your competition. If you can come up with solutions your competitors haven't offered, advantage you. Show prospects you can be part of the solution during challenging times and they will be more likely to do business with you when things pick up.
Re-evaluate your strategies.
One of the things you should tell yourself in 2001 is that, in terms of your approach to the marketplace, nothing is sacred. If there was ever a year to try something new, maybe even outrageous, this is it. If you're not getting the sales you need, what's it going to hurt if you shake things up?
It's natural for us to operate our business in a way that suits us. And when things are going great, we actually justify making customers do business with us on our terms. The unspoken thought might sound like, "Hey! So what if they don't like it. I've already got more business than I can deliver."
But when the phones stop ringing, or when they ring and the news isn't good, it's time to re-evaluate the way we look to our customers, plus how we touch them and how they touch us. And that re-evaluation requires a two-step conversation with our customers.
First, a question: "What can we do to help you?" See above.
Second, a statement: "Here's what I need from you." This is where you actually train your customers about how to work with you as you make necessary internal adjustments. For example: Understanding why you have to re-align the sales staff, or helping you make delivery efforts more efficient.
Many internal changes you make are going to affect your customers. As you are re-evaluating your strategies and re-orienting your operation, don't forget to include your customers in this process.
Write this on a rock... All economies operate in cycles: good times, bad times, and everything in between. Unfortunately, we don't get to sit out a downturn. The perennially successful businesses stay focused on the customer, regardless of economic conditions.
