Riding the Storm Out With Your Neighbors

Riding the Storm Out With Your Neighbors

Hard Times Could Foster Friendlier Competition

Razor thin margins are here to stay. You can beat your head against the competition, but aren’t they in the same boat as you? Back in the day, R&S companies sub-rented equipment from each other. There was not a well-developed wholesale industry.

Yes, sometimes Company A would steal a show out from under Company B, and then B wouldn’t rent from A for two months, but in general the system worked. What allowed it to work was owners and principals talking to each other. This doesn’t happen very often anymore.

  • (or the first time in a long time). I often get to listen to one company complain about an unfair competitor and then see them turn around and face the very person they were talking about. What happens next? It’s often as if they were long lost family. (And how often do they really compete? It’s usually that one job they remember.) At the end of the day, we are all just honest folks trying to do right by our employees and customers. So as we face a very uncertain 2009 and all wonder what it will mean to our businesses, let me propose a novel idea — talking to each other and do a little business together. In addition, maybe there are some unexpected synergies to be found in renewed B2B relationships that go beyond sub-renting gear.
  • What will be the number one concern for employers in 2009? How to keep revenue-generating staff working through the lean times. I can see owners fidgeting already. “Tom is going to suggest that I sub my most important assets — my people — to our competitor.” Yes I am. It’s just crazy enough to work.
  • First of all consider the alternative. If business gets lean and you have highly paid folks sitting idle, you’ll have a bigger problem than the fact that your competition talks to your employee. Second, big corporations do it all the time. An honest handshake (backed up by a simple noncompete document) can attest that the two parties agree not to hire any of each other’s introduced employees for 12 months after the last exchange of talent. Let your attorney knock out the one-page wording.
  • Before all my freelancer friends take up arms, this can benefit you as well. Business owners value your work and loyalty and want to see you survive in a downturn. If two companies have a reciprocal staffing agreement, then it is much more likely they will refer freelancers when their staffs are not available. Freelancers would not be covered by non-compete documents, so you might even pick up a new direct client in the process. A smart stager might even book you first and then rent you to his competitor.
  • Staffing companies get some positive spin on this as well. I know from first-hand experience that the temporary labor business will be on a roller coaster the next couple of years. There will be a surge of living room laborbrokers trying to leverage their personal relationships with these stagers. Business will be feast or famine as customers try to maximize their own staff and avoid calling you altogether — until the last possible minute. You should approach this head-on.
  • As a staffing supplier, I would try to introduce my clients to each other. Help them figure out how to do what I describe above. Perhaps you could become the conduit for their transactions? At the very least, you will become a trusted player in the exchange; increase your contact with decision-makers; and be able to leverage opportunities to round out crews from your team. Picture a show where part of the setup crew comes from two competitive stagers and the rest from you. It’s way better than nothing. Next, maybe you could be subbing techs from your customers? If you do hit a spike in business, see if your clients have some excess capacity they want to share.
  • And stagers, don’t forget about sub renting equipment. Competitors can make special deals on systems and especially on those unique, one-off products that seemed such a good idea in 2007 and now collect dust going into 2009. Owners: When you set up these special arrangements, please share those terms with your teams. After so many years of pitting one company against the other, it can be awkward for one operations manager to call the other and say, “My boss talked to your boss....”
  • This may all seem premature — we have been talking downturn for ten months and it still hasn’t reached most markets. There are still plenty of optimists that believe things won’t be that bad — and I hope they are right. But even the best-case scenarios predict a six-month recession starting in first quarter 2009. Worst-case predictions started last month and run for three years. Call a competitor and have lunch. You have a lot in common right now.
  • Tom (T.R.) Stimson, MBA, CTS, is president of The Stimson Group, a Dallas-based management consulting firm that provides strategic planning, market research, and process management services to the AV Industry. Tom is the 2008 Secretary-Treasurer of InfoComm International, a member of the ETCP Certification Council, and keynote speaker for the Rental & Staging Roadshow. Contact him at tom@trstimson.com.