One Thing Your Business Needs To Thrive In An Awful Economy
In 2006, I left college after finishing my sports career and entered the mortgage industry. I only lasted 6 months because I wasn’t mature enough to be self-employed, so I went to work in sales shortly thereafter. In 2008, the economy declined into a recession because of the mortgage crisis. By that time, I was working for AT&T which at the time had exclusive distribution rights to the iPhone. At a time when many industries were facing serious economic peril, AT&T was experiencing record profits and had people lined up around the block for months trying to purchase iPhones. Sales representatives were taking home record commission checks during what most people recall being the worst economic atmosphere since the Great Depression. Is this different than 2008? I think this economy is very different. In fact, I think things are more difficult for business owners in many ways, but they can also be better for you as a business owner.
This Economy Is Different
The reason things are different with our current economy versus the 2008 economic downturn is that 2008 started in the real estate sector and spread into other industries, but I don’t recall dealing with so many different challenges back then. The housing market, even though it was hot, hadn’t yet created the housing crisis we’ve faced in the NW market as it relates to affordability. Food prices were relatively stable, and there wasn’t a shortage of people wanting to work. Right now, with inflation rampant, the workforce not returning to work, and the cost of goods rising at the fastest pace in 50 years, we are experiencing a very different environment than what we saw in 2008. In addition to that, it seems that the political environment is impacting how people see work, and what they think of capitalism, and this is creating new demands on organizations that didn’t exist previously. Consumers now think about where they shop, where they eat, who they do business with, and where they work more than they did in 2008, which is a challenge that many entrepreneurs and organizations are unprepared for.
The opportunity entrepreneurs have in the current market has to do with the advancement of technology. The digital transformation we’ve gone through since 2008 has provided business owners with access to consumers in a way previously impossible, even for billion-dollar brands. Entrepreneurs can participate in eCommerce, with millions of consumers buying products and services from their Apple & Android devices, something that wasn’t the norm in 2008. Businesses can now generate revenue online while their entire staff is home with their families. Consumers are completely comfortable purchasing food, home essentials, courses, and everything else imaginable, and having someone else pick it up and drop it off for them. In fact, according to Zippia.com, the mobile commerce market comprises nearly 73% of total e-commerce as of 2021, a 39.1% increase from 2016. Not only can businesses generate one-time transactions, but with the rise of the subscription economy, where consumers pay for ongoing services like Netflix, Amazon Prime, and Audible.com, businesses can generate ongoing revenue that increases the value they drive to their customers while also improving their cash flow.
Positioning Your Business To Win
To thrive in the current economy with uncertainty, inflation, costs, and negativity running rampant, you need to immediately refresh your mindset and begin to think about ways you might be able to shift your business model to increase revenue, attract and retain the best employees, and cut costs. The time to do this is now. Regardless of how you vote, the economy is shifting and as an entrepreneur, you can’t afford to do business the way you did business before the pandemic. It’s time to create products and services that clearly differentiate your business from others in the marketplace and communicate a clear market-dominating position.
When I went to work for AT&T in 2008, they sent me to a two-week in-person training to educate me on how they differentiate their brand from Verizon, T-Mobile, and Sprint. It wasn’t just about the iPhone, which is why AT&T has continued to be a dominant player in the telecommunications market. The key differentiators that made them a dominant player in the market were things like:
- Being able to send a text message and receive emails while being on a call.
- Unlimited internet options without having your speeds throttled.
- Rollover minutes, which allowed you to bank unused minutes on your phone plan.
These, combined with the fact that they had exclusive distribution rights to the Apple iPhone for 5 years created a market-dominating position, something that customers couldn’t get anywhere on the planet. Even when the exclusive on the iPhone expired, I never entertained going to Verizon or any other platform that got access to the iPhone. I want that for your business and it’s not only by finding a product that no one else can offer, although it really is. It might not be as easy as signing an exclusive joint venture with a technology partner or supplier for your business, but it also could be.
Signing a major strategic partnership with a company like Apple would no doubt change your business overnight. That, obviously, isn’t on the table for every entrepreneur. So in lieu of thinking of massive changes that can dramatically change your business, I want you to consider what is possible by making incremental changes in your business that will dramatically increase your net profits and potentially double the selling price of your business when it’s time to exit.
During the past couple of months, through The Entrepreneur’s Ultimate Tax podcast and other conversations, I’ve been learning from experts about something I call “incremental advantages”. The experts I’ve been networking with across different industries specialize in helping entrepreneurs improve their business with their specific service, incrementally. For example, in my area of expertise, I saved a 2-million-dollar company 15k dollars on payment solutions and it took me 15 minutes to run an analysis to help them take advantage of my experience. I referred them to another expert I know in the telecommunications business, and they were able to help their business too. It’s realistic to expect this business to recapture up to 100k in waste and lost revenue just from the inefficiencies we are finding by helping our entrepreneur clients position their businesses to shift with the changes we are seeing in the economy. The interesting thing about it is that they will likely uncover 100k in revenue without investing a significant amount of time to find it. I am seeing businesses drive major profitability improvements like this in less than 30 days without spending a dime on new advertising or marketing. Finding incremental improvements in your business could help you:
- Create signing-bonus programs to attract employees
- Develop and fund programs that retain key employees
- Fund market research to develop unique products & services
- Invest in marketing programs and joint venture partnerships
- Improve cash flow to restructure or eliminate debt
This is just the start of the different strategies and incentives you could create to completely supercharge your business growth.
Build Your Plan
The one thing you need to thrive in the economy we are facing is a market-dominating position. Creating one will help you attract and retain the best employees and customers while also driving incremental advantages in all aspects of your company that will help you reach new levels of profitability. A few things you can do to prepare your market-dominating position are:
- Study your products/services and where they stand in the market
- Uncover what threats exist in your market and how they could be overcome
- Determine what strategic partnerships could enhance your offerings
- Reevaluate pricing, loyalty programs, and ideal client profiles
- Evaluate vendor contracts and pricing
There are lots of opportunities for you to grow your business in the current economy, even if it’s incremental growth. Take the time to sit down and build your plan or hire some help to help you build your plan. If you’d like help creating your market-dominating position, don’t hesitate to reach out and schedule a call.