Too many companies go into hibernation when times are tough. They cut costs, conserve cash and act as if they’re on the verge of bankruptcy when, in reality, their balance sheet is still solid enough to reposition the firm.
Whether it’s a recession or a downturn in your particular industry, don’t assume you can wait until the storm has passed before taking action. It may be too late.
Use these setbacks to get aggressive. It can be a great opportunity to build market share.
One entrepreneur’s experience
Auto parts maker Warren Industries, for example, had to endure some painful body blows at the beginning of the 2008 recession. The troubles of General Motors and Chrysler contributed to a 45% drop in sales.
Despite the slowdown, CEO David Freedman wasn’t about to start circling the wagons.
In addition to bolstering its engineering capacity and developing proprietary technologies, the company took advantage of the economic downturn to negotiate better lead times and prices with hungry suppliers.
It also purchased machinery and other equipment at bargain-basement prices.
Move up the value chain
Even before the recession, Freedman and his team realized it was no longer good enough to simply stamp out and assemble other companies’ parts. They needed to move up the value chain by adding engineering expertise that allowed them to develop their own proprietary products.
The result was transformational. Warren Industries evolved from a Tier 2 company making other companies’ products into a Tier 1 supplier developing innovative and highly engineered products that it can now sell directly to customers.
6 ways to go on the offensive during tough times
- Reinforce relationships with clients and suppliers. Reassure clients you’re a dependable supplier who will be there for the long term and confirm that your suppliers are stable.
- Boost operational efficiency. In times of crisis, employees are open to change and galvanized to help.
- Rethink your business model so that the offering is truly differentiated.
- Attend industry trade shows. They’re a great way to make new contacts, develop new markets and find out what’s happening in your industry.
- Understand the services available from organizations like BDC and Export Development Canada. They can help grow a business in difficult times.
- Form an advisory board. It can be a wonderful source of fresh ideas and bring skill sets that are often out of reach for many small businesses.
