A little more than two years ago, I wrote a column in this space warning entrepreneurs to beware the coming recession. Canada’s economy was roaring ahead at the time, and few were anticipating a downturn. Sadly, my prediction came true, though not for the reasons I expected. I foresaw the manufacturing/auto slump, but I had no idea that the subprime mortgage syndicates were undermining the entire world economy.
Nonetheless, I will now put my record at risk by making another prediction: this, too, will pass. Prudent entrepreneurs, even as they struggle with today’s liquidity challenges, should be planning now how to take advantage of the coming recovery. Here are a few ideas:
Create a skunkworks. That’s a rogue, autonomous product-development group that works on new ideas that could be crazy — or produce a home run. The original “Skunk Works” at Lockheed produced America’s first jet fighter (to close the gap with the Nazis) and the U2 spy plane. Google insists its engineers devote 20% of their time to projects of their own choosing, and expects managers to spend 10% of their time on new products — initiatives that have spawned Google News, AdSense and Gmail.
Encouraging innovation may do more than produce new widgets; it’s a great way to keep your employees engaged. IBM Corp. used skunkworks to exploit short-term market opportunities; it not only generated US$15 billion in revenue, but, turned out to be a powerful retention tool.
Don’t stop marketing. Most managers’ first instinct when business slows is to cut the marketing budget. Keith Thirgood, a partner with business-to-business marketing specialist Capstone Communications Group in Markham, Ont., offers a case study from the early-1990s recession. For a management-training firm just starting out, Capstone devised a full marketing strategy that included customer segmentation, direct mail and “warm” follow-up calls to top prospects. By marketing in a near-vacuum, the new company found a customer base eager for new solutions.
Explore the world. When the economy is growing, no one wants to take time out to research new markets or government assistance — so, now is the perfect opportunity to investigate foreign markets for your goods and services. Consult local exporters, join an export association or talk with the regional experts at Foreign Affairs and International Trade Canada, Export Development Canada or your provincial trade office. The resources await you.
Make the move. If you’ve been squeezed for space or considered opening a new store or office, try to pick up real estate on the cheap. Prices have fallen and landlords are dealing.
Develop new partnerships. Whether you’re looking for new distribution, allies on big projects, co-op marketing opportunities or potential acquisition targets, now is the time to get out and meet prospective allies. Increase your network by getting more involved with your trade association, attending business events and cold-calling potential partners to arrange get-acquainted lunches.
Build your banking relationships. Tough times make bankers nervous. But according to the Canadian Federation of Independent Business, the banks are trying not to clamp down on entire industries, as they did in the early ’90s; instead, they’re looking for individual trouble spots. Get ahead of the game by meeting with your bankers to explain how your business is faring and your future plans — especially those that will require bank support. Now’s the time to lay that foundation.
Be a better boss. If times are tough, don’t just cut people’s hours or lay them off. Look for alternative solutions, such as offering half-days or even unpaid leaves for anyone wishing to travel or spend time with family. Maybe you know other businesses willing to share half-time workers. Each job you save today is one you won’t have to fill later.
Stay positive. You’re a leader, so there’s no complaining or portraying your company as a victim of circumstance. As Toronto organizational-development consultant Ursula Erasmus says, “If a leader kills enthusiasm and depletes energy during a downturn, it is almost impossible to relight that fire.” Nothing was ever accomplished by pessimists.
If there is one initiative you’d like to read about in greater detail, e-mail me at firstname.lastname@example.org by December 31. The most popular topic will appear in the next issue. Even if the recession is over by then.