Resultsman’s Blog


10 Years to Get Here; What’s Next?

Posted in Uncategorized by resultsman on February 6, 2009

10 Years To Get Here; What’s Next?

It has been nearly 10 years since the Glass Steagall Act was repealed. This removed safeguards that had been in place since 1933 and allowed commercial banks to acquire brokerage firms. During the intervening time we all enjoyed some wonderful business conditions. Unfortunately, excesses and abuses of sound business judgment created a bubble that has led to the deep recession that we now find ourselves. Nothing new in that statement! 

Here you are running a business that is mired down in these tough times. The important issue is, “what actions should be taken in the here and now to protect for the future?”

So, What Is Next?

You have done the obvious things to take care of the business.  Costs have been cut to the bone. Maybe, you have released good people from service.  Your product line has been rationalized and streamlined to focus on the businesses core competencies.  You have analyzed the customer base and segmented them into profitability groups. You’ve increased the service that you provide to your most profitable customers. At this point you really can’t afford to lose any customers. You have considered and perhaps diversified into new areas.

 

My answer, carry on.   Plant the seeds for growth. Make your sales calls on customers and prospective accounts that you want to do business with.  Implement the marketing programs (to your financial limits) that will create a demand for your products. In general run the business with the full expectation that conditions will recover.

I’d like to relate a story from the 1980’s that occurred in the Louisiana Oil patch following the crash in the price of oil.  Times were grim in Texas, Louisiana, Arkansas and Oklahoma. The region experienced a downturn in economic conditions that were remarkably similar to what we as a nation are experiencing now. The demand for crude oil and refined gasoline products had dropped dramatically. Businesses were failing. The price of real estate through the region crashed falling upwards of 40% in some areas.

One of the nations’ largest refineries in Lake Charles laid- off over 1000 workers and shutdown the majority of their operation.  I had an appointment with operations management set up for the day after the lay-offs occurred at this refinery. When I got into my appointments office, the first question that I was asked was “Do you know what happened here yesterday?  Why are you even here?” My reply was “yes I do know, and I believe in this site and its people. You will recover and come back.”                  

I repeated this message at account after account through the Gulf Coast.  I acknowledged the situation and that accounts were not in a position to make immediate purchases, but I also expressed confidence in the people and the organizations that I did want to conduct business with. We were in this together.  I told them so.  To make a long story short, I was rewarded when conditions did improve.  Sales tripled in a 3 year time frame. 

 

 

 

 

Diversify if Applicable-

If diversification is in your plans, now might be the time to do it. Do what you have to in order to survive.

This might mean getting into areas of your mainstream business that you had never considered. I recently spoke with a contractor who specializes in designing and installing custom kitchens. He told me that people just are not spending the money to customize kitchens right now.   He is diversifying into refurbishment and refinishing in existing kitchens just to keep his business on operation. 

There are opportunities out there to purchase good sound business that will be valued reasonably from a Price to EBIDTA perspective because of the downturn in the economy. Keep your eyes open, inquirer. As the adage states,“ Nothing ventured, nothing gained.”

 

Show Strong Leadership and Persevere-

Times will recover and business conditions will improve. This is a time to show strong, positive leadership. Don’t be reckless. Businesses and people have to persevere. They need leaders to encourage them to do this.  Stay positive.  As a nation we can (and will) work our way out of this present situation. Recessions, while they hurt, can be good for the economy as a whole. They create the platforms for future growth.  Remember, it took almost 9 years to really get into this recession. It will take time to recover.

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