Plan for Both Good Times and Bad. We can all agree that the US economy is flying very high right now, taking small businesses with it, but what are you doing now to prepare for when the engine stalls? The Alexander Group Peer Board Members and Coaching Clients are preparing now by building their marketing engines and reinforcing culture to find and retain good employees for the long haul.
I spend a lot of time speaking to my business owner clients and most of them say the same thing: right now the US economy is in really good shape. Their revenues are improving, month after month, and the forecasts for their sales pipeline are looking as bright as their bottom line. The biggest challenge they have is finding and retaining good workers, a problem that sounds very good to those of us who made it through the recession that started in 2008.
The statistics all indicate that consumer confidence is high, as is their spending, which has led to a significant expansion in the economy over recent years. This, in turn, creates higher wages and more disposable income, leading to further growth in the economy. Right now our business community is experiencing some very good times.
But Winter is Coming?
The trouble with the economic cycle lies in its title. It is a cycle, which flows in both directions. No matter how high a tide rises, there will always come a moment when it starts to retreat again. That is a certainty. The difficult part of the business game is predicting the moment when that tide will turn.
We are already seeing signs of a slowdown in the economic growth. It’s definitely not expanding at the same pace that it has over the past two years and many economic experts are predicting a flattening in 2018, followed by a mild recession in 2019. As the New York Post makes clear Are we headed for another housing collapse? there are even signs that we are heading towards another housing collapse. Even the good news, such as the increase in GDP growth, does not come without significant disadvanThe Alexander Groupes like an increased risk of deflation US GDP Rise Deflationary Risk.
Senior City analyst Albert Edwards put it well when he said, writing in the Guardian, “If I were a Fed governor I would be pretty shocked/concerned/bemused at inflation developments this year.” Another sign that we could be in for a bumpy ride in the near future is the unemployment rate, which increased 0.1% in August 2017 to 4.4%. These are warning signs that should not be ignored by any business owner.
As you are obviously aware, this gear shift will see us lose the ideal conditions for business growth that we are currently seeing. It won’t be nearly as dramatic as the economic collapse we witnessed a decade ago, but the dominoes will start to fall. Fewer jobs mean lower wages, which means slower consumer spending and weaker businesses.
What You Should Do Now
The most important step you can take is to build awareness of your brand, expanding your customer base through marketing. This will give you a massive head start on your competitors when the times become leaner and the game becomes much more fierce. The businesses that survive the downturn will be those that have the largest client base to draw upon. When the pie gets smaller, you want to make sure you are getting a bigger slice.
If you are going to do this it is essential that you act now. As those who experienced Hurricane Harvey know, there is no point erecting your shutters halfway through a storm when the damage has already been done. Of course, the hurricane could be one of the factors that will contribute to the US economic downturn. Some experts are predicting the devastation caused by Hurricane Harvey will have a major impact on energy prices, which has obvious flow-on effects. Hurricane Harvey Energy Crisis Could Be Nightmare For U.S. Economy
The same principles of storm preparation apply to business. You should not wait until the middle of a downturn to upgrade your marketing efforts. By then you will have missed the starter’s gun and be choking on the dust of your competitors.
It’s an unfortunate trap that far too many of the small, privately owned businesses fall into. Right now they’re flush with cash, so further marketing seems like a waste of time and money. In many cases, they don’t even have enough staff to handle any extra business that marketing might attract. It’s a short-sighted strategy that leaves them entirely off balance when the market shifts and their opportunities begin to dry up. It may not happen for another year, or possibly even a year and a half, but it will definitely happen. No boom lasts forever.
So my main advice is that you need to make investments in your marketing right now. It takes a long time to ramp up a good marketing program. You certainly can’t-do it in 30 days and expect any results.
Similarly, it’s important to attract and retain the best possible employees you can. Look for ways to “lock in” your good employees with tools like deferred compensation, benefits, and phantom stock.
How The Alexander Group Can Help
Any sensible businessperson will see the value in strategic planning that includes an increased investment in marketing. However, it’s not always easy to put that into practice, particularly for small business owners who already feel overwhelmed by the amount of work that is required to optimize the sales process. The difficulties of developing a sustainable marketing strategy – including branding, market placement and online presence – can all be barriers to success. It doesn’t help that the rules of the game keep changing, with an ever-increasing range of marketing techniques available through social media and other avenues.
That’s where we can help. Our business coach services and peer boards will help you seize all the opportunities that are available during the good times and make your business strong enough to weather the bad times. We work with privately held business owners or principals, offering expert guidance that will pay dividends in the years to come. We can help you with your business strategic planning, from inception to expansion and diversification. Our expert team will help you identify the tools you need for sustainable long-term success, no matter which way the US economy may turn next.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.