Steve Davies Online

Every cloud has a silver lining, and the forces that create difficulties for your business may also create issues for your competition. When one door closes, another one opens and the businesses that can outlast their competitors can be big winners.

There are four golden rules:

• be prepared and organized
• have liquidity on hand
• identify the weaknesses of others
• be prepared to invest during difficult times 

It’s difficult to see when you’re in the game but here are some examples of how upside can be generated.

Employees 

The major issue I hear from all my clients is that their employees are lacking in initiative and common sense. During a tight labor market this can be tough to overcome, but when other businesses hit difficult times and start letting people go, things loosen up.  

There are very real opportunities to replace marginal staff with much better people if you have the courage to push through.

• Be on the lookout for new staff
• Advertise when you don’t need to
• Be prepared to scrape the barnacles    

Suppliers and Purchases 

During a recession, everybody feels the pressure and tries to bolster sagging sales. In many cases that equates to softening prices and you have to be alive to that possibility.  

If you need to buy fixed assets, keep an eye on the auctions as companies go out of business and sell assets at a fraction of their retail value.  

Acquisitions 

A downturn may be the time when your competitors recognize that they no longer want to fight the battle of corporate survival and are receptive to merging or selling. Depending on their mental and financial state, they may be available for a number that makes really good sense to you.

• As with employees, they won’t find you – and you have to make the first move.
• Prepare a mail campaign
• Have a professional (accountant or consultant) follow up by phone       

Business Rationalization 

Most businesses have more than one line of business, though the differences are typically not well thought out. It can be as basic as parts and service, equipment an installation or more sophisticated involving different product lines to different types of customers.  

Are any of those different lines of business more recession proof than any other? For instance, a business that sells and services appliances will find that a recession makes people more inclined to repair than buy new and the focus should be moved from new sales to repairs.  

Better still, is there any part of your business that actually benefits from a recession?