We perform market research and are frequently asked, “so how does this impact my business”? Trying to provide a simple answer with immediate action steps forced us to develop a smarter approach. The following is what we use to run our business and the advice we provide.
Start with looking at the economy as a series of ocean waves that pass around the world, impacting everyone. The waves occur in predictable patterns that reward the smart and punish the slow. So what does smart look like?
The Wave Pattern
Like any wave, it has 4 parts, the bottom or trough, the face or upward slope, the crest or top, and the back or downward slope. All that remains for your oceanography degree are two more concepts, period or the time between crests and the amplitude or height of the wave. Let’s apply this to the economy. Based on what factor is currently driving the economy, like global trade or a war, this force propels a wave worldwide. How powerful the force and its duration determines the wave’s speed and size when it rolls through your industry.
Pattern Dictates the Smart Move
At the Bottom – the economic downturn has cleaned out poorly run businesses and excess inventories – including yours and your customers. It is time to start or increase marketing to your existing customers. You might have to continue any price concessions, but selling on price is about to end. YOUR MOVE – Anticipate Demand and Expand into Current Markets with Your Current Offer.
Beginning of the Face – the economy has started its recovery (a view not yet shared by everyone), and rising demand is absorbing any remaining inventory; credit institutions start lending because businesses will now borrow. Why? Customers have started buying. Also, the loss of competitors opens opportunities to expand to unserved markets, niches, or customers. When the market expands, it is time to take over your competitors’ space. YOUR MOVE – Anticipate Demand and Expand into New Markets with your Current Offer.
Top of the Face – good times are here again. Everybody has a short memory of the last time, but you know the bubble has started. If you started early and made the smart moves, now is the time to grab what is left. Your last move is to expand your existing accounts with a new product or service. It has better margins and solidifies your relationship for the coming downturn. YOUR MOVE – Meet Demand and Expand into Current Markets with a New Offer.
Over the Crest – the smart are starting to conserve cash. They are cleaning up their credit accounts with investors, creditors, and suppliers. Everybody else is reacting to what was obvious, but they have no plans for surviving the upcoming winter. So while they are wondering what to do next, the smart are ensuring the seed for the next season is saved. Like all the others, this downturn will end, and those ready to act early will benefit the most in the next expansion. YOUR MOVE – Focus on Cash Flow Management, Lean Up the Organization by Reducing Fixed Costs.
Bottom of the Face – owners that didn’t heed the warning signs of a diminishing market, the true depth of the contraction is becoming obvious. Usually, they waste energy by focusing on what should have been done and what wasn’t. New sales are shrinking, and existing customers are cutting back. The financial situation is becoming critical – an outflow of cash exceeds the inflow, which draws upon savings and credit limits. This assumes they have cash reserves and credit. YOUR MOVE – Focus on Cash Flow Management, Lean Up the Operation by Reducing Variable Costs and Lower Prices to Existing Customers with the Cost Savings.
Where are we today?
Given the optimism generated by the recent election and easy credit of the last few years, we are in the face of a rising wave. If you would like to explore this further and receive detailed steps from taking for your business today – check out our blog and download our Business Primer. It will provide you with access to our library of best practices and answer the question – What If You Knew What We Know?