Pre-boom economy: are you ready for the journey?

Pre-boom economy: are you ready for the journey?

In a networking group someone floated the idea of living in a pre-boom economy, namely that we are now preparing for the next boom time. I think this a great way of looking at the situation from a creative point of view.

Imagine you are setting out on a trip around the world through all continents and you have a bit of time to prepare.

You will start doing some research on the places you would like to visit and the places to avoid that are maybe to volatile. You might look things up on the Internet or go to seminars and meet with people that have gone to these areas before you. In business terms research your market, where is the potential and where are the dangers. Speak to others in your market place and observe what they are doing or even businesses in similar market segments with similar customer. Now is a good time to analyze and learn what works and what doesn’t.

To prepare for your trip around the world you may have to work at your own fitness, the kind of equipment and clothes and even medication you may need, some places may even require injections against diseases. To make sure you enjoy your trip, you will take all the necessary action in the build up towards the journey. In your business it is equally important to look at what you have inside from people to processes to equipment, do they need to be brought up to speed in order to make it to the next boom. Does your business need an injection of customers, cash, skills, etc? If the answer is yes, then it’s time to look at an action plan to make it happen and work the plan. In Nike’s words ‘just do it’.

In your preparations for your world travels, undoubtedly the thought will cross your mind whether you are actually mentally fit enough for the journey. For some people this is the actual show-stopper and they will quit for fear of not making it all the way or running out of money or not having people to support them or home sickness. When I work with entrepreneurs mental readiness and ability to carry on even in tough situations will differentiate the successful ones from those that don’t make it. It is vital to build a support network that you can turn to and trust when you need advice or even just a small word of encouragement, who holds you accountable if you are the owner and are they supportive.

Then when you start your travels, there will be unforeseen circumstances that may send you on a detour such as a local train strike or natural disasters. whilst you are travelling you take them in your stride and deal with them as you go. In business it is exactly the same, customers may decide to go elsewhere or even close their business, staff suddenly leaves or strategies that used to work are now outdated and no longer deliver. The key is to analyze what the cause is and then to adjust your actions and take a different direction. It may sometimes mean parting company with people, clients or suppliers and whilst these decisions are difficult to make reaching the destination may require the tough decision.

On your world tour you will also meet interesting characters, visit beautiful places and experience wonderful things, so in your business equally make time for the good stuff and have fun along the way.

Are you the upstart that will kick-start this economy?

Are you the upstart that will kick-start this economy?

In times of economic recession the small indigenous businesses will be the ones driving economic growth and change. Why? Because big companies will take a while to adjust and small lean organisations can adapt and change to go with the flow of new demands a lot easier.

For large organisations the focus will be on cutting back and increasing efficiency from within, most of them will face redundancies as we can already see in our news reports. Change is typically slow and will receive a lot of resistance despite obvious market conditions. It is also that time when new ideas will hit the market and some of the people looking at redundancy packages finally going after the dream or concept that could be the next big thing.

In my view small adaptable businesses will be the ones to bring our economies back to life and as well as the new start-ups that are yet to find their way to the market. Will it be IT driven, environmental or green theme, cost saving or older generation focussed? That is crystal ball material. However we do know from historic fact that each recession has seen new businesses emerge to become the future employers and giants in local communities.

So if you are the person with that great idea, what should be your focus right now? The first thing to find out is whether there is a market for your product or service. The most frequent failure is that your great idea doesn’t actually relate to anybody else in the market place and when you are doing market research do go well beyond asking your family and friends, who may well just be trying to be nice to you and support you in your madness. If you have watched the TV-programme ‘Dragon’s Den’, the first thing investors look for is market potential and not just finger in the air material, but hard concrete numbers, contracts and sales facts. In an ideal start-up you sell your product or service before you actually go about producing brochures, leaflets, websites, or product for that matter.

The next step is to find out what people are willing to pay for your product and service. In this climate with tightening purse strings you may need to test a few price ranges in order to find the one that will make you profit. Profit is one of those areas to focus on from the start, you need to factor in all your costs and price your product and service in such a way that you at a minimum cover all the costs and have some spare margin for profit. I meet entrepreneurs all the time that forget to do this and after 12 months of hard work they are still not making any money and wonder why, when you look at their costs and pricing structure the 2 often live in a world apart. If you can appeal to different parts of the market for example with a low -end non-branded product and a then a high-end top of the range branded product with all bells and whistles you have an opportunity for bigger profit from one-side and bread-and-butter business on the other. In my view both need to cover all costs of production including wages (even if for now as the entrepreneur you are not taking any money out).

Once you have priced and sold your first items, you are basically in business and in service delivery or production. From here a focus on consistent sales, good customer service and delivery will be critical to your success. To ensure that this happens, you need a plan to work with. Not a business plan that will gather dust in a drawer, but a very basic action plan of daily, weekly, monthly and annual targets is good enough. Basically target figures that will tell you whether you are making money or not. Always know your break even point: where costs and and money made meet and any excess becomes profit.

In this climate most of our conversion rates have come down or slowed down, in other words the number of potential buyers we need to meet in order to generate sales will be slightly higher and slower to make a decision than in a boom market. So be prepared to jump over a few hurdles to make the sale. In our line of work we have started offering a counter proposal to potential buyers, where we will make an offer and if they are not happy they can come back with a counter offer. I then evaluate if we can deliver within these boundaries and based on some of our internal business guidelines, more often than not we proceed with the business. In my view having the business at a rate that both parties can afford is essential to survival of both businesses.

When sales are coming in on a regular basis, keep a close eye at all times on costs and what the competition is doing out there or even alternative services or products that have sprung up, which could potentially take some of your client base.

Remember though if at first you don’t succeed, you may need to tweak or change your practices in order for it to work. In some instances it may mean going back to the drawing board and start from 0. In the USA the average successful business person that receives venture capital investment has failed 3 times. I am not promoting that you fail, but I am promoting that if it doesn’t work the first time and you stumble, to dust yourself off, learn the learnings from your first experience and go again with an adapted plan.

In this climate seek out fellow entrepreneurs and share some of the positives, support each other, and work together to turn this economy around. In a boom economy anybody can make money, in a downturn only those with a solid product & service, some vision and a plan will succeed as long as they have the courage to start and stick with it. So here is the question, are you the upstart that will kick-start the economy or are you the muppet in the balcony that knew it wouldn’t work?