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Written by Dr. Jac
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Tuesday, 31 August 2010 12:47 |
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It is now apparent that this recession is going to be not only long but also may take another dip. Banks aren’t lending because their balance sheets are still a mess. So, companies can’t borrow for growth and are not likely to until better economic signs stabilize. Consumers aren’t spending because of job loss and general insecurity. Other than that things are great!
The question is, how does a company, particularly a small one that does not have substantial resources, survive and grow in these circumstances?
I’m on the board of a few such companies and we have been able to grow in double digits through this economic morass. There is no magic but there are principles that seem to work as judged by their income statements. Briefly, some of the drivers are careful but not choking cash management, wise product development decisions based on market knowledge and special attention paid to key employees keeping them motivated and retained (there is a trick to this).
I believe the most important is understanding the real market and not the hoped for or desired market. This requires in-depth analysis of what customers are truly willing to pay for in this market, not what we hope they will buy. My experience is that marketing people can be very persuasive, but not always realistic. I’ve seen cases where the sales people said they could sell a new product “like hotcakes”. Without objective analysis investment was made and the products never got off the ground. In one case it forced the company to sell itself before it crashed.
Bottom line: get someone as an advisor or on your board who will be positive but critically objective. Take emotion and vested interests out of resource allocation. Finally, be willing to change past practices that really don’t fit the new market.
Dr Jac
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Last Updated on Tuesday, 31 August 2010 12:52 |
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