In today’s business environment, the question is not whether there will be an economic downturn, but when. The economy is growing—for now. But good times are the ideal time to contemplate a plan for when a downturn occurs so that you and your business can thrive even in a bad economy. Here is what you can do now to protect yourself:
Boost Market Share
Building market share during a good economy provides more opportunities to remain solvent when a downturn occurs. Strategies to build market share include:
- Expanding your target markets, such as by opening a new location or branching out into supplementary markets.
- Developing contingency plans so you can act quickly when you see bad news on the horizon. The best defense is a strong plan so that you know what actions to take in the event of an economic decline.
- Acquire any competitors you can afford. This is the fastest and most affordable way to grow market share.
Feedback from clients is a valuable free tool. Use it to your advantage. Listen when clients seek you out, but also ask them their opinion. Send email surveys. Call them to check-in, and put a real person behind the company name. When a client leaves, send an email to ask what you could have done differently. Then listen and act accordingly.
Cultivate and Improve Relationships
Every successful company is part of a network of mutually beneficial relationships. Smart managers even form friendships with staff at competing companies, just in case. Relationships matter most during an economic downturn. Cultivate them and strengthen them to give yourself a competitive advantage when the going gets rough.
When times are tough and prices plunge downward, people may still pay more for a brand they trust and know. So make sure your branding is consistent, effective, and designed to attract the right kind of attention. Remember that branding is more than just marketing, so if you are not sure of the distinction, now is the time to meet with a branding expert.
Market expansion is always a good thing, but do so methodically and at a pace and prices which can be absorbed without putting the company at risk. Overextending management and overpaying are not recipes for success during difficult times. Consider how the 2008 financial crisis punished market players who grew too quickly and got too ambitious. Balance your zeal for growth with a practical, conservative approach.
Always Be Ready for M&A
One of the best ways to survive a downturn, especially if your cash reserves are low, is to sell before it happens. By protecting your business now, you ensure it will be well positioned to appeal to the right buyer. Make your business buyer-ready by planning for the future, getting your books in order, and tying up loose ends. It would be wise to meet with an M&A advisor to assess options for promoting value and being ready in the event that you must sell. A skilled M&A advisory firm will be able to provide you with valuable information and recommendations, and that information can offer you a much more robust picture of what the M&A process holds in store, and how attractive your company might be to a prospective buyer.
ABOUT WINDWARD ADVISORS
Windward Advisors, LLC is a sell-side, buy-side, capital raise, and corporate growth advisory firm. Windward specializes in helping business owners better prepare their businesses, with the intention of increasing shareholder value by providing strategic planning and corporate growth advisory services, and by representing owners in the execution of sales, acquisitions, and financial structuring transactions. Windward is an advocate of ensuring that business owners are knowledgeable about their alternatives and we work closely with other trusted advisors to assist owners with properly preparing before pursuing transactions.
MR. HOWELL AND MR. JOHNSON ARE REGISTERED REPRESENTATIVES OF, AND SECURITIES PRODUCTS AND INVESTMENT BANKING SERVICES ARE OFFERED THROUGH BA SECURITIES, LLC, MEMBER FINRA SIPC. WINDWARD ADVISORS, LLC IS A SEPARATE ENTITY FROM BA SECURITIES, LLC. WINDWARD ADVISORS, LLC AND BA SECURITIES, LLC ARE NOT AFFILIATED ENTITIES.