Business Growth for Uncertain Times

Will 2015 be a boom year for your business or will external forces hold you back?

In looking through a bunch of economic forecasts for 2015 I was struck by the range of different opinions. From modest growth to the potential for a great depression like we haven’t seen in the US since 1929. I’m not an economist and I don’t have a crystal ball but I know one thing, when opinions vary this much it creates a deep uncertainty for businesses.

Almost everyone will tell you that uncertainty is bad for business, and they’re right if you follow the conventional wisdom and wait it out. But there’s a wholly different strategy that businesses can take. A strategy that doesn’t create risk but which allows them to capitalize on some unique conditions that only happen when business is slow.

Good Times vs. Uncertainty

When the economy is in growth mode growing a business is a whole lot easier. It’s relatively straightforward to invest in expanding production or markets and grow sales and profits. The problem is that everyone gets a little too happy and a little too short-sighted. Investors and management see sales and profits growing and it’s easy to extrapolate that it will continue on, and to ignore inefficiencies.

Uncertain economic times are a lot like this deep-freeze winter weather we are having across the US right now. Most people don’t want to go outside, and definitely we don’t want to invest in planting anything new. It’s easy to stay inside, stay warm and wait for it to pass as we know it will. But there’s another strategy you can use to capitalize on uncertainty without exposing yourself to risks.

Why uncertainty can be good for your business

I know, it sounds a little crazy, but in times like this when caution is the rule, the opportunity to really get ahead great. This is especially true if your business isn’t the ‘big guy’ with all the money and resources to throw into your business. Here are three reasons why, and a little lesson from America’s first Commander-in-Chief, George Washington:

1. The competition is hunkering down

Most companies are content to sock their cash away to guard against further risk and wait until things get better. Growth expectations are lower and less pressure from investors and management means companies are more likely to settle in to where they are. During the Revolutionary War George Washington led a Christmas raid during a snow storm wiping out a superior force of highly trained Hessian soldiers. They were hunkered down and totally unprepared for the attack, and it swung the tide of the war.

2. You have to be more innovative

As Edison said, “Necessity is the mother of invention.” During better times companies can be profitable without being particularly good at what they do. But when markets are tighter the weaknesses show up much more. This is the time we are forced to look deeper, be more creative. These are great times for breakthrough solutions that can truly differentiate you from the competition.

3. You are forced to minimize risk

When outlooks are rosy and money is available creativity and thrift often take a back seat to expediency. In uncertain times risk tends to come first–which is why so many businesses stop pushing growth. But there are always many ways to solve any problem, including ways that don’t require increased spending or investment. It does mean we have to think harder and not accept the first idea on the table. One of the reasons start-up companies are so good at innovating is because they don’t have the “luxury” of having lots of money to spend. Fortunately this way of thinking is not natural for most companies.

A little confused? Puzzled about how to proceed? Good that’s exactly where your competition is, so keep reading, here are some light bulbs to guide your way.

Jump starting growth in uncertain times

1. Look within to improve your delivery system

Whether you are a manufacturer, distributor, or service provider now is the time to improve the efficiency of your operations. Complaining about external factors outside your control won’t help. Surprisingly in most industries, performance factors such as lead times and on-time deliveries do NOT improve in a slowdown, even though lower demand should make this easier to accomplish.

Skip the simple cost cutting activities. Put your attention on finding and breaking bottlenecks and accelerating the flow of work through your operation. Find the places in your delivery system where things slow down and work backs up. And then go a little deeper. Look at the “rules” and measurements you use to drive your business and the behaviors they motivate in your people.

Understanding how you create inefficiency in your delivery system exposes opportunities to break constraints and improve your process that don’t require large investments or additional staff. Over and over again we see our companies achieve gains of 20% or more from such efforts. A large medical device client of ours increased production 108% while lowering staff costs 15% by re-thinking how they manage their operations.

Direct a large measure of your focus to it. It will not only reduce your costs and increase margins, but it will provide better reliability, service and responsiveness to your customers. This is exactly what you need to retain those precious clients, and increase the reserves needed to protect your business.

2. Look more carefully at your customers’ hidden needs

As good as we may be at what we do, the reality is that none of us meets ALL of the needs of our customers. During tight economic times unmet needs become a little easier to spot, its more likely that meeting them will win you new business. Sometimes your customers are already asking for your help on these things, but often the established ways of doing business block people from even thinking about a different approach. I’ll give you a great example in a minute.

The place to start is by understanding your customers business and how they use your products or services (either in their business, or as end consumers.) Then look how your service (lead times, delivery performance, purchasing terms, etc.) might impact them in a negative way or leaves a gap or unsolved problem for the customer. Combining these insights with the improvements you made in your delivery system offers the potential to provide your clients with “an offer they can’t refuse.”

I came across a great example of this not long ago. There is a plumber that advertises his services with a unique guarantee. They will show up to your house within the 15 minute window of your scheduled appointment. For every minute they are late to the window, they will deduct $5 from the cost of the service. How likely would you be to call this company when you needed a plumber? I know I would. In fact I would even pay a reasonable premium for the service, just to not waste my day waiting on the plumber.

This company found an unmet need in the market and built the capability to meet it. It’s not a gimmick, and it’s not easy for the competition to copy because it requires having a very reliable logistics system that gets plumbers to their appointments on-time. If they don’t a company could quickly lose their shirt in penalties.

Are there needs your customers have that you and your competitors are not meeting?

Absolutely, but you are going to have to look a little deeper than normal to find them.

Economic uncertainty can be a great spur for growing your business. Allow the need to limit spending and investment to re-focus your efforts on finding innovative ways to improve your service and efficiency. It will help increase profits and bullet-proof your business. And when you do, figure out how you can use your new capability to solve a few of those unmet needs of your clients.

It’s not easy, but it’s in uncertain times like these that the winners emerge.

Now we want to hear from you, tell us what you do to gain an edge in a difficult or uncertain business climate. How do you balance innovating your business with the need to manage risk?

And stayed tuned because in 2015 we are going to be sharing more and more articles that challenge and push our readers to look differently at their businesses and their own potential.