Surviving the Economic Slowdown: Part One

Do you think business will go up or down in the years ahead? What will you do to survive if your business shrinks by 40% or more? Shouldn’t you start doing something about your future right now? What are you waiting for? It’s the last quarter in your last game of the season. If you win, you’ll get into the championship playoffs. Lose and you are eliminated. You are twenty points behind and only a few minutes remain in the game. What will you do different to win? Is it finally time to change your game plan and try a new set of plays? Think about your business. Most business owners know a slower business market will become a reality in the future. But most don’t want to make a move and change the way they do business. They are sitting and waiting wait for something to happen. In the slowdown of the early 1990’s, my business went from $50,000,000 to $5,000,000 in annual sales in only one year. It was hard to believe the construction business nearly stopped as quickly as it did. There just weren’t any jobs to bid or build. I had to reduce the number of employees from 150 to 10. I had to cut my overhead budget from $2,000,000 per year to $500,000. As your business slows down, it is almost impossible to reduce your expenses as fast as your revenue diminishes. You have to keep people on staff to finish the projects and do the paperwork long after the work is finished. In other words, you lose money in a slowing market. Consider your choices! The choice is yours. You can continue to charge ahead doing business the same way you always have and hope the economy continues to boom ahead. Or you can make some strategic moves to get ready for a business slowdown. In the late 1980’s we anticipated our core industrial building construction business market to slow down in the upcoming future. To weather the storm and diversify, we made a decision to invest in the future and hired an experience retail construction division manager to seek major retail construction work. We also tried bidding public works construction at the state universities. The retail decision worked out well and we soon become a major contractor for many of the national retail chains including: Mervyns, Costco, and Wal-Mart. What moves are you willing to take to get ready for your future? Consider two parts of your business as you decide what to do. Look at both your target market and cost of doing business. (Part Two, Tomorrow) George Hedley