When the Economy or Industry is Down, Your Company Can Succeed

The instinct of most companies during recessions or downturns is to cut back to weather the storm.  While there is some virtue in this, if you have taken the right steps in advance your company can push forward to win while your competitors are scaling back. 

During downturns in the economy or in an industry, several things typically happen to companies:

Typical Implications of Economic Downturns for Companies

·      Customers buy less

·      Cash is tight

·      Hiring is diminished

·      Layoffs are common

·      Current price levels can be at risk

·      Marketing spending is reduced

·      Investment spending is put on hold

·      Securing additional credit or loans is challenging

In this kind of environment, which companies are positioned to come out on top?  The companies that win typically go into an economic downturn with excess cash, available credit, strong customer relationships, a clear competitive advantage, and a winning strategy.  When customers are buying less, they become more selective about who they will buy from.  As a result, the companies that have been serving customers’ needs with excellence can gain market share during downturns while sustaining or growing revenue.  If prices decline, these companies have cash to move forward without cutting vital employees.  When cash and credit is available, the same companies can continue investing in the future while others put their plans on hold.

With these steps in place, these companies are likely to remain healthy during downturns rather than decline.  Then when the economy rebounds, they are well positioned to experience significant gains by leveraging their higher market share, customer relationships, and the investments they have made to strengthen their position in the marketplace.

Many of the same steps that prepare a company for a downturn can also position it to thrive when the economy is strong.   Here are some high-level strategies you should consider that can position your company to succeed:

Strategies to Succeed and Prepare for Economic Downturns

·      Have a strong cash reserve, possibly up to 6-months of stainability

·      Establish or expand a line-of-credit when times are good

·      Strengthen your ability to impress your customers at each customer touchpoint

·      Differentiate products, services, and operations in ways that align with customer needs

·      Streamline costs without impacting quality

·      Invest in employee development so they can become the industry’s peak performers

·      Fine tune your marketing and selling engine, backed by a powerful brand positioning

·      Have an investment plan that will expand your market advantages and efficiencies

·      Have a strategic plan that leverages your advantages and positions you to win

If you would like to learn more, we invite you to contact us for a deeper discussion of these topics or to learn how we can assist you as you work to build a thriving company.  You can find additional articles on business and leadership success on our Anavo Growth Partners blog page.