How to Grow Your Business in a Downturn - Part 3
In Part 1 of this series, we looked at three tectonic shifts that define our current context and in Part 2 of this series, we looked at two insights based upon rigorous analysis of what happens before, during, and after a recession. In this post, we will look at the stresses in our current recession to get a sense for the crucible that will cast your company’s destiny:
- Changes in Consumption - The confidence of all of those connected consumers we talked about has been shaken and they are spending less and saving more. They are shifting from buying new to buying used and from buying anything to merely fixing up what they already have. In short, the information inundation enables them to be better buyers.
- Increased Competition - The changes in consumption leads to an increase in competitive intensity as your growth will only come at the expense of your competition.
- Changes in Capitalization - The lower demand and increased competition means previously sustainable debt loads are now unsustainable and debt needs to be reduced and equity needs to increase.
- Increased Restructuring - The result of these stresses is that poor-performing companies either adjust or exit the market.
- Increased Intervention - And unfortunately, all of this leads to an increasingly activist government that tries to step in to stimulate growth, but instead simply slows our progress.
So this may sound quite daunting, but as God told Joshua upon commissioning him to lead the Israelites after the death of Moses: "Fear not, but be strong and of good courage."
Just like in combat, it is times like these that either forge nerves of steel and courageous action or lead to faint-hearted despair and frozen fear.
Now that we've looked at the current context and some insights, we will next look at the winning strategy. Continue on to Part 4 of this series.
- October 13, 2012
- Strategy
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