Time To Make Some Game-Changing Decisions
The fact that the Recession has ended was easy to miss, as was the beginning back in December 2007. Running a business is a lot like playing the stock market. If you remember to buy before prices go up and sell before they go down, you win. In business, we make investments in a different form, but timing is just as critical. Also important is your portfolio mix. There are three key investment areas in your business that are calling for your attention. The time to invest in them is now. A well-timed, diversified portfolio will set your company apart from the recession-bound stragglers.
Portfolio A: Tangible Assets
For stagers, nothing is more important than updating and expanding technology inventories. You can argue that salesmanship and customer service are more vital, but, without inventory, your staging business is financially vulnerable. If you are not quickly convinced, consider this: Your alternative to owning gear is to subrent from someone else. In doing so you give up considerable control over quality and efficiency, and that will place strains on your customer service. This in turn makes selling your services even more difficult. There have been a few successful examples for sustainable, low-inventory staging, but I can count them on one hand with fingers left over.
There are exciting innovations going on in direct view displays, 3D imaging, and LEDs in lighting and video. Plus, stagers can now convincingly make money from software products. Bottom line: it’s once again time to buy a lot of new equipment and cutting-edge technology. These purchases will light a fire under your sales efforts, energize your technical team, and foster better customer service. The cost of money is currently high — not as bad as the 1980s, but a lot higher than the cheap money we have had for several years. This may be a psychological deterrent, but it shouldn’t be a financial one. There is money to borrow — it will affect your cost of ownership, but also consider that new equipment is more reliable, costs less to maintain, and, thankfully, will last until the next recession.
Portfolio B: Operational Efficiency
Successful companies often develop layered management structures and silo’d decision trees and then struggle to regain efficiency when times get tough. I hope that lean and mean operations have been your focus for the past two years. I bet there were a lot of difficult decisions and probably a few mistakes as you worked through legacy processes and tired org charts, but I am sure it was worth it. If you have not made huge adjustments, then your firm might be at a big financial disadvantage when competing with the companies that have become more efficient.
As business comes back, you might be tempted to rehire positions that were downsized or reinstate policies that had been suspended. Don’t do it. Carefully rethink how you grow and avoid taking the same path as the last time. Economies rise and fall. Our responsibility as business leaders is to build scalable operations. Some folks are afraid to innovate back office operations and sales processes, but creative thinking in these areas will help define the winners in this new economy.
Portfolio C: Market Development
In my monthly blog-newsletter, I recently wrote about market channels and segments. The big takeaways from that piece are that vertical markets (automotive, financial services, and pharmaceuticals are verticals) have multiple channels (producers, marketing departments, and endusers are channels), and that successful sales teams apply different people and tactics depending on which channels they are pursuing. If you are going to invest in marketing and business development (and right now, you should), then you will make better use of your available funds if you narrow and better understand your viable channels. Remember, if you choose not to target a particular segment or channel, that does not necessarily mean you have to abandon it.
Many industry veterans view the market as a zero-sum game: the amount of business doesn’t vary and the players just trade accounts back and forth. In my experience, cutting-edge growth companies don’t buy into this; they find new markets and develop new channels. Better yet, these stagers create new types of customers. Some will be drawn to new technology, others to innovative sales and operations approaches, or even a clever marketing message. If you strengthen all three areas of your portfolio, then you will have the tools to take advantage of the long-awaited, post-recession growth.