It’s official. We’re in a recession. Recessions naturally inject fear and panic, which is only heightened by every discussion of market losses, layoffs, bailouts, and somber predictions. We’re only human after all; of course everything affects us personally and emotionally.
Fear is not a catalyst for productivity however.
With valuable advice pouring in from concerned and sympathetic entrepreneurs and proven leaders, businesses are indeed responding quickly to make decisions that equate to a secure and prosperous future—hopefully.
This constructive advice has helped businesses focus and weigh difficult decisions sooner than they might have without it.
However, over time, productive guidance has mutated into a glut of negative forecasts and grim predictions that pillage precious and vital airtime from contributing to the resolution of our financial predicament. Simply said, fear, and the dissemination of distress, slowly erodes hope, vision, and ambition, ultimately killing businesses instead of guiding them.
Fear inspires desperate actions. Hope (combined with clarity and inventiveness galvanizes action and engenders opportunities.
Opportunity vs. Emotion
These are emotionally charged times which only fuel emotionally-driven decisions. Unfortunately, the advice shared from many experts now and in the past is subjected to both literal and open interpretation, and thus guiding or misguiding the next steps of established businesses and emerging startups.
Don’t worry about getting ahead, instead, just survive…Cutting deeper and quicker is the formula to survive. – Sequoia Capital
There’s a distinct difference between mere survival and succeeding in real world business. Many companies may unwittingly lock themselves in an isolated panic room instead of taking strategic steps to evolve and grow the business opportunity that exists today.
General advice is just that, general. One prevailing set of strategies and recommendations doesn’t apply to all.
In a conversation with veteran CEO and financier Steve Larsen, currently co-founder of Krugle, he advises:
Of course, don’t be stupid. Have enough cash to run your business, but I think the doom and gloom crowd are getting too much airtime. Look for opportunities. Difficult times are when they’ll most likely occur. When we’re at ‘steady state’ and things are normal, good opportunities are much harder to find with GREAT opportunities nearly impossible. It is during periods of tumult and transition when you can spot things that lead to the greatest returns—if you are alert. So be alert.
In every recession, abundant opportunities are inherently rife. To simply believe that this is a generic time to step off of the playing field to warm benches or take a seat in the spectator bleachers in the hopes of emerging once again to readily have a shot at winning the game is illogical. Businesses, and customers, do not stop making decisions—they’re just more discerning during volatile economic climates. But make no mistake, if you choose to stop vying for customer attention, the world will move ahead without you.
This is your time to vault in front of your competition, to earn rapid and sweeping visibility, for a fraction of the time and money that was required to excel during the “good days.”
Your rivals are retreating right now, so what are you going to do about it?
Chinese military strategist Sun Tzu advised in The Art of War:
When weak, feign strength…Attack him [your enemy] where he is unprepared, appear where you are not expected.
Whoever inspires you, remember, tomorrow’s leaders are born, tested, and proven, today. This is your moment.
Development vs. Revenue Generation
As a startup, you are now, officially, on your own. You can’t count on your VCs saving you or some magical offer from Yahoo or Google showing up to bail you out. — Jason Calacanis
If your company is guided by a board of advisors or group of investors that are not actively in tune with the real world opportunities and hurdles of your business, then their advice and direction may be questionable. Either they’re investing in the development of a product/service or they’re investing in the development of a commercial business or acquisition opportunity.
Depending on goals and milestones, there’s a stark difference in not only how the company is run, but also how its leaders assess and implement critical cost-cutting measures or where additional investment may be required. And, if users or customers are involved, the process of cost cutting isn’t necessarily a sweeping solution.
If resources are dedicated to research and development, assess the state of progress coupled with the runway of current cash and expectations. The key question is, “how can you get from here to there with less than what you’ve already been spending or planned on spending this year?”
For those companies who rely on customers to market products and either hit profitability or simply attain proof of concept through adoption, customers are not expendable. Cutting or freezing any program that connects your solution to your customers is dangerous and requires careful consideration. This IS the time when businesses must invest in the transcendence from survival to market leadership. This recession is temporary, but business is constant.
Do Not eliminate marketing or sales efforts. Okay, I’m biased here, but cutting marketing and sales has a direct and reverberating impact on future income, so don’t be surprised if next quarter’s numbers are down. Without support, sales will continue to trend downward.
Be wise as you evaluate your sales and marketing efforts. With the right team, you may want to consider maintaining or increasing financial support in order to excel while your competition retreats.
Do create an innovative and cost efficient formula for running a concentrated, sustained, and proactive outbound marketing program that effectively creates a bridge between your core customer’s needs and your product.
While companies are cutting costs to extend their runways, consumers and businesses are reducing spending in parallel. However, it’s important to remember that customers are not freezing spending altogether. They are and will continue to research, invest and procure the solutions, services, and products that will help them succeed, offer entertainment, or streamline aspects of their day-to-day workflow. And, they’ll also continue to make impulse decisions just for the hell of it.
Building Your Business in a Recession
Obviously, capital preservation and cost cutting do not equate to sustenance or growth. The driving factors are poles apart when striving to merely stay alive vs. building a business.
If you’re sheltering cash to focus on development, then cut the services and expenses that will not impede your ability to cross the threshold to market success. If you’re conserving funds to prolong life, then realize that the only fountain of youth is cash itself. Focusing energies on generating revenue, increasing visibility, and enhancing customer loyalty are the most effective strategies for underwriting longevity, and hopefully growth, especially during an economic downturn.
The real question you have to ask yourself is, “How will my customers find me today and tomorrow?”
I’m not sure if this is a newsflash or not, but customers do not typically go out of their way to “discover” your products and companies. They have choices and it’s the job of any marketing and sales-centric business to reach their customers where they go for information—otherwise, they’re out of the decision making process by default. Marketing and sales are the conduits for connecting prospects to your business.
In a down economy, tomorrow’s leaders are born today. It takes vision, focus, and a hyper-connected sense of what customers are seeking, why, and where.
The reality is that there are hard costs tied to customer acquisition and retention. The key is to observe and listen to your customers to ascertain the most active and direct channels to reach and engage them.
Here are several, targeted and affordable suggestions:
1. SEO – Customers actively use search engines to find relevant solutions. Keyword and organic search optimization is an inexpensive and effective means for gaining strategic presence.
2. Blog Relations – It’s not just about news and pitching the A-List, creating a consistent and visible brand requires the inclusion of the authoritative, peer-to-peer blogs that your customers and influencers read for information, help and perspective. Oh, and be wise about using embargoes.
3. Media/Analysts – Reporters and analysts cover your space and by simply writing about your company or product, they can position you as an option among your customers; especially when they’re researching options to validate decisions.
4. Direct Sales – Some of the most successful companies right now are concentrating on direct outreach to the decision makers instead of hoping to influence them from the sidelines.
5. CRM – Building a customer-focused business saves money and increases revenue. Focusing on customers and empowering them improves business processes, product development, and also offsets marketing expenses as “involved and participatory” customers transform from a cost-center into an active surrogate sales force.
6. Participate – Social networks are much more than mere time killers. Participating across the social communities where you’re customers and prospects are active and vocal provides a looking glass into their thoughts, requests, opinions, dislikes, and recommendations. It also provides you with priceless opportunities to combat negative perceptions while also positioning your company as a resource.
7. Thought Leadership – One of the best ways to demonstrate thought leadership is to actively share your thoughts where they count. Contributing articles and posts to industry publications, forums, and blogs increases visibility and unobtrusively contributes to your sales strategy by helping customers find you.
8. Blog and Blog Comments – It may seem trite or perhaps even worthless, but I can guarantee that finding the time to host and contribute to a blog that demonstrates the expertise of you and your team is priceless. People are looking for information and direction, not just from your blog but others as well. Go where they are and offer counsel, contribute to the dialogue and establish trust and authority in the process. Why wouldn’t you position yourself as a resource for your customers or prospects? Too busy you say? Empower your staff. Contract outside experts to contribute to creating a one-stop-shop for insight and direction—just be transparent about their involvement. It costs less than you think to build a community around your product, or at least what it stands for.
9. Network in the real world – Participation isn’t solely relegated to online networks. Opportunities to meet and cultivate relationships in the real world are abundant. Meetups, industry events, groups, unofficial lobbycons associated with your favorite events are continuous and more valuable with your involvement.
10. Involve Your Community – Save money and time by involving your customers in the development process of your new and iterative products as well as your go to market strategy. Alpha customers are often ready to assist with the validation of your business model and also the honest feedback associated with your product benefits and features.
11. Websites are not Just Web Pages – Your Website must make an emotional connection with visitors, while also conveying stories and value propositions that specifically capture the attention of your customers – otherwise, all of your hard work and investment of time and money in sales and marketing campaigns will generate traffic, but lead to a dramatically reduced conversation ratios.
12. Innovate – Always learn and improve everything in order to stay relevant.
Buy When No One Is Buying
If it ain’t broken, don’t fix it, is the surest path to obsolescence. Equally, swinging the axe without accuracy and grace will also send you packing. Constraint forces and inspires creativity. Operate not from fear, but from vision, determination, and ingenuity.
In a down market, generally speaking, this is the time to strategically cut dispensable expenses, but also invest in growth. It may appear as common practice, however, current actions demonstrate counter intuitiveness. You sell when people are buying, not when people are selling. You buy when no one is buying, not when everyone is frantically bidding the price up. These are indeed the times to invest in the success of your business and your personal brand.
Remember, the economy is a yo-yo on an escalator. It might go up and down, and down some more, but eventually, it’s always going up (once we fix it, this time).
Any company that intentionally pulls itself from the radar screens of potential and existing customers will find itself on a direct path to the Deadpool.
It is during these most difficult times when character is truly tested and defined.
To paraphrase Al Pacino from Any Given Sunday, the inches we need to be successful right now are everywhere, and it’s up to us, and only us, to fight for them. And when we add up those inches, it will make the difference between winning and losing. Find and keep the people who will fight for those inches with you. That’s a team. Either you win as a team or you all lose as individuals. But fear will not help you win at all.