The surge of daily bad economic news is upon us. Believe me, the media will play it for all it’s worth, because we all know that bad news sells.
Three players make up the general story. All three have something in common. And this is good news.
The first player, at the moment, is deeply tied to the housing and construction industry somewhere along the supply chain. Business is off 10 to 30 percent.
The second player is tied to the global marketplace, principally, as an exporter. Business is up, also by 10 to 30 percent.
The third player, on the domestic scene, wonders what all the fuss is about because business is still good.
At a recent quarterly meeting, TEC (The Executive Committee) chairs who represent more than 700 diverse businesses in Wisconsin and Michigan pointed out that this is a confused and complex picture.
What, then, are the common factors that each of these players share? I list them in no particular order.
Seize opportunity
All three players are in a suitable environment to take a hard look at the competition and out-compete them. This might take several forms, but here are some present-day examples:
• Step up sales promotions and advertising to become more visible in the marketplace.
• Step up recruitment efforts to take advantage of good market “buys.”
• Shop for discounted capital equipment leases.
• Renegotiate long-term contracts to a more favorable advantage.
• Convert open-ended lines of credit to low-interest term agreements.
Advance market share
Competitors, out of fear or desperation, are likely cutting back on anything and everything they consider to be a discretionary cost. More likely than not, they are focusing on their core customer group. Take advantage of this by:
• Attacking them at the flank. Seek out their secondary customers and offer them deals they can’t refuse.
• Revamp sales incentives to reward increased market share performance.
• Package a new product/service offering with fewer features but the same overall benefit at a lower price.
• Form an alliance with a key vendor to jointly penetrate a competitor’s marketplace.
• Develop an audit scheme where you can show existing and new customers how to cut costs when using your product or service.
Acquire the competition
In good times and bad times, this is always an attractive strategy. But in a sluggish economy, the likelihood of acquisition success increases dramatically. Why? Because no one else is thinking about it, and the candidates for acquisition, if already on the low end of the smart business curve, are ripe for conversation.
• Use an outside mergers and acquisitions firm to help identify the most likely candidates.
• Involve your investment banking arm early in the process.
• Form a small due diligence team to do the homework and in-site evaluations.
• Go selectively public with your general interest in acquiring a strategically compatible business interest.
• Communicate openly with your employees about your intentions.
Revisit your strategic plan
There’s a noticeable tendency among businesses during economic slowdowns to pull back, retreat, and live one month to the next. Your strategic plan, however, should be anything but short term. Here’s how to confirm it:
• Update your strategic vision and mission statement.
• Reinforce your “business values” commitment.
• Define new critical long-term issues.
• Make sure your marketing plan, as Brett Favre said recently during his retirement announcement, is looking through the windshield and not the rear-view mirror.
• Set new corporate goals for the next three to five years.
• Involve your management in this revisiting process as soon as possible.
No strategic plan? Shame on you! Take the time to develop one now. It will be a real confidence builder for your management team in particular and your employees in general.
Make a renewed commitment to employee development
When business is soft and employees have more times on their hands, what better time than now to invest in their development? This is insurance to prepare for a better tomorrow.
• If you’re a CEO, consider joining TEC (The Executive Committee).
• If you’re a senior manager, consider EA (Executive Agenda).
• If you’re a new supervisor, consider MRA (Management Resources Association).
• If you have a college degree, consider an executive MBA (UWM or Marquette).
• No college degree? Consider an associate degree program (MSOE or MATC).
There are many local seminar and training opportunities available as well. Clearly, in-house training by qualified employees is the most economical alternative available to most companies today, particularly in the area of technical certification processes.
The first and most important step is to conduct a training/development audit among key employees. Then draft a plan to fit your company’s budget and needs.
Put it all together
There’s no doubt that in future months, the media will continue to parlay the bad news portion of the news formula for all it’s worth. This is psychologically distressing, to say the least.
But our three players can counter these efforts by celebrating their business successes every step of the way. Some TEC companies, historically, do this by holding unscheduled “victory” parties, customer recognition days, or highlighted success stories in the company newsletter.
The CEO must take a key leadership role in this process by being a visible champion of it. He or she sets the tone and emphasis of success celebrations, which others will follow without hesitation.
Until next month, may your business success benefit at your competitor’s expense!
