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The right business can prosper in any economy

Written by: Larry Mandelberg

Article Overview: If you are trying to shield your business from the vicissitudes of economic fluctuation, there is a simple rule you must live by: Focus on customers’ needs. Because of current economic conditions (February 2009), this article focuses on how to ride out a recessionary environment.

The right business can prosper in any economy

Of late, the morning news seems to pour out nothing but doom and gloom on the national economic front. Each day Wall Street shifts and groans under seismic change as Main Street appears to retreat into the next ice age. Throwing initial panic into the pool of nervousness, Wall Street’s rocky response suggests business, as we once knew it, is surely going down the drain.

Some very smart people created some very real economic problems and good solutions remain elusive. Rest assured, growth and profits are still out there, even in this mess.

As Wall Street’s recent run of glory seems to flicker and dim, new business opportunities rise like a Phoenix from the scorched earth of the housing debacle. The current economic environment is chaotic yet many businesses continue to thrive.

Ever since the industrial revolution, American business has gone through cycles of so-called good times and bad. Even in those bad times, cloudy skies have a few rays of sunshine finding their way through so long as you know which way to look. The trick is being able to get past the collective wisdom and find those opportunities you and your company can take advantage of while everyone else seems to be suffering.

There are two primary reasons a company does well in a ‘down’ economy.
• The business is resistant to economic hardship - agriculture, security, protection or health care are classic examples for obvious reasons.
• Businesses that are a part of the value chain providing products and services that serve and protect the general public tend to remain strong.

Whether a business is resistant to hardship or part of the value chain, they are inexorably linked.

ECONOMICALLY RESISTANT
People must eat to survive. Anything that helps get food on the table easier at a lower cost will always be in demand. Products and services connected to food are also a powerful platform on which to build solid revenues.

When times are tough, people tend to buy fewer new items and repair older items as they break. One example: New-car sales are down dramatically while auto repair shops and auto parts stores are seeing sales growth at a time when other stores on their block are suffering. Linked directly with food and repair, transportation is another industry that enjoys consistent strength.

SERVING THE GENERAL PUBLIC
Our society has become addicted to energy and technology. From the iPhone to the Kindle, we keep creating new ‘must-have devices’ that keep us tethered to a power outlet, regardless of new battery designs. Any business related to the creation or distribution of energy tends to be strong regardless of the state of the Union.

The modern off-shoot of this concept is “green” energy. Demands for solar, wind and wave energy keeps growing at a faster pace each year, both in research and production systems. These industries have the added advantage of being recipients of beneficial tax treatment and multiple creative funding vehicles.

Industries rich with public-sector support through good times and bad include fire protection, crime prevention and health care. Any business delivering value to these markets will be working from a solid foundation it can stand and grow on.

FINDING YOUR SWEET SPOT OF OPPORTUNITY
What’s hot? Exporting - translation, minority focused products and services are hot. Property management and maintenance work along with low-cost retail products are hot. Services in accounting, health care, food and basic needs suppliers (retail), staff management and efficiency, accountability and feedback systems, lawyers, accountants, technology, government sector support, process improvement, environmental sustainability, cost reduction programs - even cemeteries and mortuaries.

There are many ways you can redirect your business toward one of the areas of the economy that are still strong, and have a good, sustainable future. Of course finding those links is not easy; if it was, nobody would be hurting. When you can find new ways to demonstrate value, you will be well on your way to making your business recession-proof.

How do you begin? This is the ideal time to reconnect with your customer and supplier base to reassure them you are doing well while strengthening your relations with them. Ask them what they need to succeed in this economy, and let them know you are looking for new ways to deliver value to them and help them grow. You might be surprised at some of the creative ideas they have for you.

As fads and trends change, so do the areas of opportunity when a strong economy transitions through a down cycle. As competition struggles and fades, many possibilities lay hiding in their wake. Right now is an excellent time to take a close look at your market strategy and seek out new ways to reposition for previously untapped or unrecognized markets. Change is upon you whether you like it or not. If you embrace it and keep a watchful eye for hidden business, you just might find yourself back on top of the wave instead of stuck in the trough.

Related Articles
  Small Business Survival Tips For THIS Economy
  Recession-Proof your Mind (Part 1)
  The Financial Rollercoaster of Americas Economy
  Business Killer Mistakes You Cannot Afford
  Recession Resistant Franchises

Article Tags: american business, cloudy skies, collective wisdom, debacle, doom and gloom, down economy, economic environment, economic front, economic hardship, economic problems, food on the table, good times, industrial revolution, initial panic, morning news, nervousness, new business opportunities, scorched earth, security protection, value chain



Related Forum Posts
The Hidden Hand Effecting Your Bottom Line - If you are based outside the U.S and run an online business, you'll probably receive a lot of your payments in U.S dollars. When the recession hit I saw a lot of non-U.S business people boasting how they [u:20bfadx5]hadn't been effected by the recession[/u:20bfadx5], brushing off the recession as something that was not important. But they [u:20bfadx5]overlooked the hidden hand[/u:20bfadx5] effecting their profits. The currency markets which for non-U.S businesses paid in U.S dollars has masked the effect of the recession somewhat, and has an incredible effect on your overall profits. Looking at my profits over the past several months I can see fluctuations up and down. I may have a hard time attributing what is causing these fluctuations if I believed the recession didn't effect me because overall my earnings and traffic are up. But then I compare to the U.S - ££ exchange rate, and notice a [u:20bfadx5]strong correlation[/u:20bfadx5] with my profits. When the dollar is strong my profits are higher, and when it is weak they are weaker. It didn't account for all fluctuations but the effect was very strong. I know most people are aware that exchange rates effect their business, but I don't think people realize how strongly it's effects can be, and how closely related to the economy this is. So to say "the recession didn't effect me" because your profits went up can be [u:20bfadx5]very wrong[/u:20bfadx5]. The hidden hand of exchange rates could have improved your profits, and the exchange rates changed due to changes in the economy, i.e the recession. The recession has caused this fluctuation in exchange rate as people fled from the stock market into cash, and with the $$ being the biggest currency in the world, more people fled into the dollar, pushing up its value against other currencies. When the stock market bounced in March and people moved back into stocks and other investments, the dollar weakened. In addition I did see a overall drop in advertiser spend which wasn't just attributed to the dollar weakening after March. I attribute this to advertisers cutting back their budget in response to the economy, but given a change in mood and outlook in recent months this is now reversing and advertiser income is up despite a weaker dollar. So the recession has played a bigger role in my business than at first glance, so just because profits are up does not mean my business is not being thrown around by external economic factors. For this reason I've studied the economy, made a prediction on what is most likely to happen based on trusted sources with the strongest track record, and made a plan for that eventuality, and then also plans for less likely scenarios, so that my business can prosper in either situation. Instead of overlooking this hidden hand it is important to recognize it is there, and not accept it as a mystical force your business is a slave to, but something you can react to and plan for in order to take your business further.
Service Or Product? - I'm doing an interview with CBC news this weekend about starting a business in a down economy. One of my recommendations will be to start a service based business instead of a product. My philosophy is to get to cash flow positive as soon as possible and running a service helps you keep your costs low (no production costs and very little overhead required). What do you think? What other advice would you give to someone who is just starting up in this economy?
Re: Service Or Product? - Service company always thrive in down economy. Let look at the advertising industies in any economy, you need to advertise your products or services even if you cannot afford any other things
Re: Plan Your Retirement NOW - Hi, Beat I must say the state of the economy has me worried these days. Not so much the state of it...but the knowledge that the politicians and people who are supposed to be in charge of the economy are so incompetent it's not even funny...
Re: Service Or Product? - All things being equal Evan, I completely agree with you. A service would be much more manageable and predictable in a down turned economy. However, it is also important to recognize that the cost of goods also plummits during these bad times, and to amass stock or inventory for future sales could be part of capitalizing on this bad economy. Good luck with CBC!


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