Anticipating the Credit Crunch

Business has to adapt to the changing conditions and change your plans. Business conditions right now are transitioning into a more severe recession than expected. The shutdown and forced sales of US financial companies and banks. This is the reason for the bailout which really should be called a credit stabilization bill.

Inflation was the story at the beginning of 2008. Currently inflation is being reduced by the improving value of the US Dollar. It is not how much the US economy has improved, but the global economy has gotten worse faster than expected in Europe and Asia. Only the oil producer’s economies are doing well. The rest of the world is slowing down quicker than the US economy is.

Helping with inflation is the bursting of the bubble in commodity prices. Oil rose to a high of $145 per barrel, and now has returned to around $95 per barrel. This happened in only a few months. Oil price will be volatile depending on political and weather related interruptions, but is gradually dropping towards the $60 – 80 range in 2009. Demand for all commodities except food has dropped.

The real problem now is the credit crunch. Banks are trying to raise capital to survive, and are not giving loans they gave last year. Credit card companies are tightening their limits because of losses. This not only affects consumers, but lots of small companies use credit cards instead of a line of credit. Lines of credit are harder to get for larger businesses. Taking a second mortgage on your house is more difficult due to lower values and tightened lender requirement. These all will accelerate the credit crunch.

Keep your perspective. No recession lasts forever. There are a few steps to take right now to prepare.

Hang on to all your cash
1. Sell down inventory as low as you can. Sell excess and obsolete products by reducing prices.
2. Cancel all unnecessary expenses, subscriptions, software, and leases.
3. Sell and scrap unnecessary equipment.
4. Lease out or sell unused space. A sublet tenant can improve profits.
5. Pay credit on time and make sure your bank knows you are profitable. You need a good relationship for future credit needs.

Review your products and prices
1. Do you know which products create profit for you? What do they actually cost without overhead?
2. Increase prices or discontinue unprofitable products. Do you need all the finishes or colors? Increase prices on money losers to reduce demand, or…
3. Replace dated and noncompetitive products with new designs to improve margins. Design simpler products or combine two products to reduce cost and improve margins.

Improve your business

This is a major opportunity to improve. Focus your business on a mission. We need to serve our customers better and better. Measure your most important attributes for customer satisfaction and make sure you improve.

1. Advertise more. Stay in contact with existing customers more. Find new customers.
2. Expand by adding more products to sell existing customers. Partner with other suppliers to your customers.
3. Keep your key people and performers. It is too expensive to replace your best talent.
4. Hire better talent. Lose your weakest performers who slow down or move them to positions where they have ability. This is the best time to find the people you need to grow and be ready for the recovery.
5. Plan to grow more profitable over five years. Find new products, services, or profitable niches. Others are cutting costs only. The great companies grow more competitive.

Recessions are opportunities. Take full advantage of them for your benefit.

A Geeky Remedy For Recession Blues

Forbes has a wonderful article by Christian Lindholm about the power of design in results, and what sells in a recession. Highly recommend reading it

http://www.forbes.com/technology/2008/09/16/iphone-nokia-design-techsolutions08-enter-cx_cl_0917design.html?partner=technology_newsletter

It has been too long since I have written, so expect some new postings soon. Basically would like to comment on the economy.

Enjoy,
Steve

When Will Oil Prices Fall?

The main cause of high oil prices is political. Environment nimby’s have stopped construction of power plants with lawsuits, and punitive taxation stopped investment domestically.

No government has successfully managed an economy like a business. We have been successful letting the market determine winners. The government can sponsor research, but business has to invest. Its simple – higher taxes equal no profits and no oil.

What should we do is promote every energy source. Drill offshore, coal, natural gas, solar, hydrogen, conservation, and nuclear. Government should not pick the winners, but goal has to be energy independence.

When will oil prices fall? When the US has the will to build nuclear power plants.

Energy Independence

President Bush’s energy proposals to Congress include the right solutions to free the US from energy dependence. We need more domestic oil production, natural gas, pipelines, nuclear power, solar, grass based ethanol and to better technology to clean coal for our independence. There will be few jobs in the future without energy infrastructure, and the political risk from oil producing countries cutting our supply is substantial.

Our dollar is falling in value for because of oil imports. Oil imports were 4.9 billion barrels in 2007. Estimate $75 per barrel is $367.5 billion, or 50% of the $711.6 billion US trade deficit. We need to expand drilling off all coasts and domestic refining.

Corn based ethanol is not efficient and is causing food shortages. We need to develop cellulous (grass) base ethanol.

France generates 90% of their electricity with nuclear power. Our nuclear plants are decades old and need to be replaced for safety. Solar power will contribute in the next decade, but we need electricity at night for non polluting electric cars.

We need to balance fiscal, political and environmental responsibility in our energy policies. The US can not surrender our children’s future to imports. We need to meet our own needs domestically.

Invest in Productivity and Innovation

The economy is in a mild recession. The housing bubble has burst and is reverting to mean (normal) values. The super leverage of the 2000’s is being unwound as the investors who took the risk are paying the price of risk. There is a lot of speculation about how bad the economy will be.

We will not have a great depression. This is just a normal business cycle, unless political protectionism makes the situation worse. This cycle is predictable and expected by mature investors. There are challenges coming, but nothing to panic over.

Consumers will not be able to use their homes to use like an ATM to keep spending. Increased energy and food costs further will reduce consumer spending power. Consumers will change their spending towards different priorities for the next few years until incomes increase again. Job outsourcing globally will keep salaries low.

Consumer spending is the driver of two thirds of spending. Fortunately the world is now more successful everywhere, and increased demand is now coming from Eastern Europe, Asia, India and the Middle East. So consumer spending will recover internationally first.

So how will the economy recover? Productivity and innovation has always driven economic growth.

Invest in businesses, products or services that increase productivity. Can you lower shipping costs, use energy more efficiently, use less material in products, service clients quicker at less cost, or reduce overheads? These are the drivers of productivity. And the companies that do this are the ones to own.

Innovation and market changers are the companies that will thrive in the future. Look at Apple’s success in changing the music market. There are kids who have never bought a CDs nor albums. They buy music through iTunes. Television and movies are the next to be changed. Low cost hardware and better software has made an explosion of producing content available. With so many choices for customers, how can major studios or networks hold on to viewers? Look for distribution over the web to grow.

Computer grow exponentially more powerful, and programs now do the leg work of thousands of technicians or clerks. CAD changed how we design products, test ideas, and do research. Better quality and lower prices have come with these innovations. In fact, as the price gets lower more people have access to the power of software. Look at the success of new medical products that are improving medical care. CAD has speed up development tremendously. Furthermore the web will be replaced by cloud computing which will increase the amount of data available faster.

Invest in energy businesses that increase productivity of creating energy or conserving energy. One caveat, they must be profitable at a much lower oil prices. Energy will be the next bubble to break. $100 to 120 per barrel is not sustainable.

Oil was stuck in the $15 to $20 per barrel range for two decades. A price of $30 dollars per barrel would be reasonable today with normal inflation. The value of the dollar fell about 30% over the last two years, so $20 to $30 per barrel is now $30 to $45 per barrel. Demand will fall at the current high prices, and alternative production methods are cost effective above $30 per barrel. Both will reduce future demand for oil and lower prices. Invest only in energy processes that are cost effective at $30 - $45 per barrel. I expect oil to fall to $60 – $70 per barrel in 2009.

In summary, the future economic growth will be from productivity and innovation. Productivity and Innovation will overcome a few years of low growth or recession. This is where we need to invest for future profits.

Redefining Success

In High School success was passing your courses and graduating. Having friends, a date on Friday, and a date for the Prom are good.

In college success was still passing your courses, but more important was figuring out your major. Most of us had no experience whether we would like our career afterwards, but we choose them anyway.

After college success was getting your first job and an apartment. Friends and good times may be a priority. The adventurous take breaks and travel, while most of us tried to figure out what we are doing at work.

Next success was finding love and marriage. Success is finding a partner to love and who will love us.

Family comes after marriage. Success was buying a house or condo. As the family grows, success was getting a bigger house.

Getting promoted, or getting a better job was our next definition of success. Some will choose to be self employed instead.

At some point, the economy or business cycle changed and success was keeping our job as other were laid off.

Maybe your next success will be retiring, or maybe it was a recent success. Perhaps you will consider it a success to find part time work to keep you busy, or success is more games of golf.

While these are all fine goals, I think most are not a good definition of success with the exceptions of love and family. Let’s propose a better definition of success.

Success is when we take care of customers. Success is earning a living. Raising good children is a success. Success is when we make the world a better place.

Success is when we do for others selflessly. Success is not about us, not what we own, but about serving others. We succeed when we help. Help any way we can by either our time or money. Volunteer at charities or church. Volunteer in you schools or neighborhood. Just take action for others.

Isn’t that a better definition of success for you to live by? Change your definition of success and you can leave a better world. Then you are succeeding!

Solving the Energy Problem

Why do we want to solve the energy problem? Look at the risks of doing nothing. How much of our trade imbalance is based on oil? Oil is a significant threat to our economy and world peace.

Hugo Chavez in Venezuela has threatened to cut off oil to the US? Vladimir Putin and Russia has the power for using natural gas and oil over Europe. Iranian President Mahmoud Ahmadinejad is using oil wealth to threaten destroying Israel and potentially starting a world war against the West?

Think about the war in Iraq? The fight between the Shiites, Sunnis and Kurds is over religion, power and oil wealth. Iran, Syria and the terrorists are all interested in Iraq’s power and wealth.

How about a potential overthrow of the pro US government in Saudi Arabia? Al Qaeda was spawned under the House of Saud, and a large number of their citizens hate their government. What happens if they lose power?

Why should we continue to give money, political power, and an economic weapon to people who hate us? The current risk of supply problems is significant, and would damage our economy.

How much of our trade deficit is based on oil? The 12 months through November 2007 the US imported 3,647,889 barrels. Assuming the average price over 2007 was approximately $75 (Current prices are in the low $90’s), oil imported was approximately $273.5 billion in 2007. Our trade deficit in 2007 was $711.6 billion, making oil imports about 38% of the deficit.

To solve the oil problem, we need plans for the long term as well as the short term. This is a series of solvable projects that needs a long term vision to happen.

Short term actions:
Drill more domestic oil off all the coasts and in Alaska to cover the next decade. Everyone points to the potential for pollution. Oil drilling and transportation processes have improved dramatically over the last 50 years. The rare accidents are cleaned up quickly. Oil will always be needed for premium energy, plastics and products. The US needs to increase production.

Locate more natural gas reserves and develop pipelines to heat buildings and homes. Our infrastructure is reaching its limits, and needs expansion.

Find better ways to clean pollution from coal emissions, and require the whole world to use the technology (including China, India, Russia and developing countries) for a level playing field. China and India are causing three to ten times the pollution than the US. Why should we be held to higher unfair standards like the Kyoto protocol than the rest of the world?

About global warming:
Human caused global warming is not scientifically proved beyond a doubt. Global warming is a natural cycle with a little human contribution since the industrial revolution.

Why is a 1 degree Fahrenheit (0.5 degree Celsius) increase over 100 years traumatic? History shows a normal range of variation around 3 degrees Fahrenheit (1.7 degrees Celsius) in the last 2,000 years. Go back millions of years and the natural temperature variation is larger. The biggest factor related to global warming is the natural variation in the output from the Sun.

The fanatics are talking CO2 will destroy the world. People and animal exhale CO2. Are we talking about people and animals breathing CO2 being the main cause of a pending future natural disaster? I don’t think the world is that fragile.

If human kind is contributing less than 1% to 5% maximum of global warming, why are some panicking? Most of the research is based on computer models that are simpler than reality. These models do not work well when compared with current data. Look at the hurricane predictions from 2006 & 2007. The results missed reality going the wrong way from the faulty models. Most global warming models are based on faulty logic. The lack of good science is why I do not take global warming seriously as a panic.

Long term actions:
Generate more electricity using solar and nuclear. Solar electrical generation is finally becoming efficient enough to be cost effective. It could generate 10% of future needs as well as being pollution free. Tax incentives and private industries should be the source of solar products.

Nuclear energy is the choice of many countries including Canada, Britain, Spain and France. France generates 90% of their electricity from nuclear power. The plants in the US are aging, and need to be replaced with new, safer designs that are also more energy efficient soon. The older nuclear plants need to be retired for safety. Legal battles with environmental extremist have prevented new nuclear energy plants. We need to make nuclear power politically possible and economically feasible.

Convert hybrid cars to plug in hybrids to use less oil. This requires more electric generation from solar, coal and nuclear. Hybrids work because of the expanded range for practical transportation. Pure electric cars are too limited in distance for average commuting, and public transportation takes too much time for busy Americans to use. Most of us do not live near transportation that goes near our offices without doubling our commuting time. Time is our most valuable resource. This is why less than 3% ride public transit to work.

Create fuel cells to replace the gas engine generating electricity for hybrids. Fuel cells are getting close to being more economical for gasoline and alternative fuels like ethanol, natural gas and hydrogen.

Grow and develop grass based ethanol since corn based ethanol is too energy inefficient. Grass based ethanol generates much more energy than corn at a lower cost. We also need a pipeline system that carries ethanol. Transporting ethanol in trucks is too expensive and unreliable for extensive use.

The Results of Energy Independence Program:
A ten year program for energy independence will bring world oil back to $30 - $50 per barrel when the US stops importing oil. Dictators will have loss their income and a threat to use against the West. The possibility of war would be reduced. The American economy would improve with less trade imbalance.

The technology is there for everything proposed here. It takes a leader, political commitment, private and governmental investment, and the will to get it done. We are ready for the leadership to step up.

What Sells During a Recession?

The economy is slowing down in 2008, and this is part of a normal business cycle. The question is what should you be doing right now to get your share of business? There is no reason your business should not do well regardless of market conditions. We just have to adapt to the market and be aggressive marketing and selling.

First let’s focus on what sells during recessions. These areas do well in slow economies. So how can your business cater to the desires of your customers or consumers?

Exports sell – The recession generally lowers the dollar (already happened!) so this is the time to find products to export. The growing economies of China, India, Asia, Russia, Dubai and other petroleum wealthy countries are ideal for expanding business while you have a currency advantage. Use the value of America to sell. McDonalds and Coca Cola are great examples of exporting.

Comfort sells – people are worried about their homes, their jobs, and their family. For most people they pull in spending on big luxuries and vacations. However they replace them with familiar pleasures and little treats to make staying home more pleasant. Traditional foods, decorations, home entertainment, and health products are examples that will do well.

Value sells – money is tight, so people will hold it unless it is a good emotional or financial investment. Return on Investment and quick payback work for businesses, investors and consumers. Have features that are usable, use less energy than competitors, are green, save money, and do more for the price. Wal-Mart, Costco and Sam’s Clubs do well when people are watching their dollars. But you don’t have to be the cheapest to be a value buy. Offer guarantees and let them know they are buying a product or service that does what it says it does and performs well. Remember decisions are emotional first, then buyers justify their decision logically.

Quality sells – Ford advertised “Quality is Job 1” and it really is. People will pay for better quality. Toyota and Honda have made the best quality cars over the last twenty years, and look how their sales are worldwide. Toyota is about to be the bigger than GM.

Simplicity sells – Easy to use products and services always do better than competitors. Lower priced products and services with fewer features do well when people are being frugal. Design new versions to make a basic and simple product or service as possible. Your higher end customers will still want the old features and pay more, but get new customers into your base now and upgrade them later. Existing customers you can offer sensible upgrades and extras for more.

Luxury sells – the very wealthy are immune to slow economies unless the stock market drops precipitously. They want to impress friends and enjoy what they get. However they are less likely to buy the ostentatious instead of more subtle beauty. They don’t want to offend as much as impress. Green mansions still have cache since you look responsible, green, and have something unique compared to the merely rich in their regular McMansions. The wealthy will still travel but may justify it to themselves being combined with another purpose – “since we were in Greece on business, we visited Athens”. There are less people feeling wealthy, so you have to target and appeal to the really well off. This market is wiser about value and will negotiate more, but purchases are still emotional decisions.

Design sells – often the real decision maker between competitors is design. Better performance, distinctive appearance, new colors, fashion, different fragrances, and artistic design do sell strongly. Does the product fit the hand, easy to use, and the curves look appealing? Cadillac has recovered it name with better design products. How do the competitors look? People will pay a little more for a Target styled product than a cheaper Kmart or Wal-Mart product. They want what will impress them and their friends.

Love Sells – seriously there is no greater need for people than to love and be loved. This is where advertising has always succeeded. The original Mustang “makes it happen”, “every kiss begins with Kay” Jewelers, beer ads making you look attractive, Victoria’s Secret, and Match.com are example of how you can make it easier for romance and family. Family is often a stronger bond to support. How can you make it easier or appeal to singles and families?

Humor sells – Seriously we buy from people we like. Look at the successful Miller Lite’s ads which were making people laugh at celebrities. Some of the most famous ads were from two football players making fun of the perception football player are dumb. Playing dumb sold a lot of beer and got these guys into the movies as actors. Make sure your clients know they will have a good time with your product and service. Southwest Airlines built a great business making passengers enjoy the trip.

Novelty sells – something cute, cheap, funny and easy to talk about always sell well. A good video on YouTube.com can create insane demand. Pet Rocks with those silly directions on ‘How to Care for Your Pet Rock”, Superballs (where did mine go?), the Wallcrawlers which were funny looking octopuses that flopped down the walls, the Slinky which still fascinate kids, and the hula hoop all still sell.

Security sells – people still have desires, but with less opportunity to earn it a small percentage will take what doesn’t belong to them. Incidences of crime, especially locally, can be used that so people want to protect what they have. The tendency is already there for consumers, just get them to look at a risk they ignore to get them motivated. If you sell security advertise to your market using fear.

Advertising sells – Most businesses cut advertising first when times are tight. This is when you want to expand your advertising and take market share from competitors. Make sure to track results, and watch your budget. Negotiate better deals from your media while they are losing other business. Successful companies often expand advertising in slow economies. Save by expand internet marketing and focusing your print, radio and television advertising. Consider switching to cable television in focused markets versus broadcast ads. Send postcards instead of sale letters to save postage. Have the postcards get customers to go websites with shopping carts. Call old customers regularly. Stay in the selling mode no matter what the market is.

Follow these ideas and you may not have a recession in your business. These ideas generally work in most economies, but will work better during slow times. What can you sell now?

Business Predictions for 2008

Everyone makes a fool of themselves by predicting the future at this time of the year. So I will badly make a fool of myself by expressing my opinions on the difficult business market for 2008. Please be aware opinions do not affect the future, and your mileage will vary. So here we go…

Housing will drop big due to credit crunch. If you can’t get financing very easily, how do you buy from someone? Since it is harder to get loans, fewer buyers are available with good credit and money down to buy houses and condo. Investors buy at the value of the net income they can rent a property for, and look for bargains. Neither the lack of buyers and investors caution is good for supporting prices in housing.

Disclosure here: I have done residential and commercial real estate appraisal in California and assisted in Nevada, so actually have real estate analysis expertise. The rise in residential values ran 9 years in southern California from 1997 to 2006, and went years too far. Values could really drop back hard. Las Vegas and Arizona have already dropped prices around 30% and could go lower with so many new homes. The Inland Empire and San Diego values have dropped over 20% in 2007, so Los Angeles and Orange County are behind the curve and may fall 20% in 2008. I have predicted prices to fall off the peak 20% to 30%, and up to 50% if the economy really fell. So I tend to be regarded as pessimistic since I think the boom went far too long. Recovery should start around mid 2009 to 2010, but it is very hard to pick the bottom. If your housing prices have been falling since 2005 you are closer to the bottom than we are here in southern California.

Your area housing values will vary based on local conditions, but I expect a national average to fall by 10% without crazy loans, easy money and speculators to inflate home values. Best analysis I have read is from JP Morgan predicting land values will return to 2002 – 2003 levels, and near the east and west coasts the land may be up to 80% of home values. Location, location and location still rule when it comes to evaluating properties. Look for investment opportunities this year and in 2009.

Commercial property values will go down since it is harder to get credit here as well. It is early in this correction, locations, and property use varies so much will not predict how much values will fall. Commercial prices did not go up as crazily as they did in housing, but value depends on income and cost to borrow. A ten to twenty percent retreat would not surprise me this year in some areas.

Economy will recession early, and start the recovery before end of 2008. The credit crunch will hurt borrowing for businesses, but the hallmark of the American economy is how quickly capitalists adapt to change. China’s currency is increasing in value to the dollar, which will increase inflation as well. Consumers will cut back slightly, but most spending will continue to be stable. Styles will move away from excess to value, so imports may be hurt with higher prices of the now lower dollar. However booming economies internationally especially in India and China will improve American exports. In all, the diverse and adaptable economy will be recovering this year.

Employment will only drop mildly in the US. Finance, automobile and housing industries will be significantly hurt in 2008, but the rest of the economy should grow needing good employees. Your local conditions will vary. I will be looking for a new position in 2008, so understand personal concerns depend on your situation and industry. I expect to be with a business unit growing quickly or turning around by mid year.

Oil will fall from $90 – $100 per barrel to $60 – $70 per barrel in 2009. Politics in unstable countries can have a tremendous affect on supply making timetables hard to guess. So this is the riskiest prediction I am making. Have no special information here, but let’s look at history. Recently it took many years to go from $20 to $30 per barrel. Prices were stuck in the $15 to $20 range for over a decade. The sudden jump in oil prices from $30 to $90 per barrel happened way too quickly from a historical perspective. The cause was speculators and fears driving gains with increase international demand. The value of the dollar fell about 30% over the last few years, so $20 to $30 per barrel is now $30 to $45 per barrel. Demand will fall with current prices, and alternative sources are cost effective above $30 per barrel further reducing demand. Politics will have an effect with a president elect promising a program to reduce oil imports could speed the price reduction. Overall I expect a gradual reductions happening with jumps and falls starting in 2008.

Stock market will fall early and start recovery about mid 2008. The recovery will be mild and I like John Mauldin’s description of the “muddle through” economy. The stock market often acts as a predictor of the market and it has had a lot of growth. The question is how far we are going to correct recess or depress the market? More importantly which business sections are going to fall the most. My record here is poor historically, so do your own research. Falling should be finance companies, housing, and consumer related businesses. Everything else depends on design, innovation and value to grow businesses.

The election in November is too close to call right now. The Democrats are likely to have either Hilary or Obama, and they would be wise to have a joint ticket. Republicans have five good candidates, and possibly no one will come with a majority to the convention. Voters usually look at experience, positions, leadership and pandering. Could be another close election based on the experience of the Republican candidate versus the changes proposed by the Democrats. There is a lot of potential changes based on the economy, world events, Terrorists, Iraq and Afghanistan. In the final election the most moderate candidates between the Democrats and Republicans usually win, so that is my prediction.

Okay, this is enough predictions for me to reasonably make in 2008. Lets see how wrong I am since my record has never been perfect. Black swans events make predictions more of an art than a science. Use your own judgment about the validity of these guesses and how they may affect you.

Recommend Forbes, marketwatch.com, John Mauldin, Doug Fabian and Mark Skousen for research and information.

What To Do During 2008 Recession

Hate to be the bearer of bad news, but the credit crunch is bringing a recession to the US in 2008. If you are managing or owning a business, now is the time to plan for this year’s recession.

Are you familiar with derivatives, CDO’s, credit swaps or the subprime mortgage market? They have been the latest way banks, hedge funds, insurance companies and other investors tried to increase yields by bundling loans together. The problem is they have not properly accounted for the risk, and not enough reserves are in place for when these investments fall in value.

So people who lend money do not have enough money to lend more. Credit will increase in cost, and less will be available for business to borrow. This will slow the economy, and consumers are not able to borrow to finance more purchases.

What do we do now?
First of all keep perspective, no recession lasts forever. They are normal parts of the business cycle, and there are several steps you can do. It may be mild or a full depression, but the actions you will take are similar. You just may be forced to take more actions in the event of a depression.

Hang on to cash
If credit is hard to get, you are going have to fund expansions internally. The Stock market may not fund you, and lenders are nervous. Be prepared by watching spending and cutting overheads.

Know what makes you profit
Most people know volume of sales, but few allocate expenses fairly to each product line. It is easy to spread personnel, advertising, and overheads over all sales. It makes more sense to know which products or services cost more and what they make. Allocate almost all personnel to product lines, allocate inspectors and freight to materials, and then spread the remaining unallocated personnel and expenses over all labor and material expenses. This will show where you actually spend your resources, and how much each product or service costs. Then figure out your profit margin.

Re-price products to make a profit
Sales have to make money. Even advertising loss leaders have to increase sales to be worth doing. So evaluate which products or services create value, compare to competitors, and don’t just be the low cost provider. Less sales may make more sense for some products and services. Especially if you are losing money per sale. Price accordingly.

Kill weak products or product lines
Redesign or rationalize product lines. Let good products eat weaker products. You want products to go after competitor sales (or increase your profits), but not just because we always sold that. Can you buy someone else’s cheaper?

Design better products
Design is often the deciding factor in sales. Good design has value in attractiveness and functionality. Don’t blame the sales team for a poor product or service. Create better, faster and new services. Make products have more value. Create new looks and new markets. Growth is finding opportunities. Make sure you design to win.

Sell more to existing customers
Offer additional services and products to your existing customers. Your customers are valuable. Don’t lose them to competitors, but make yourself their partner by adding value to them a discounter can not match. Sit down and find out where their pain is. Look where you can grow servicing your best customers. Bring ideas and contacts that will grow their business. They will remember.

Find new customers
Don’t quit marketing or advertising. Find competitors to your existing customers. Especially find the young growing business that may become prime customers.

Export
The US dollar is falling in value, so find new customers in other countries. China, India, Dubai and Asia are growing in wealth so are great markets to open. Europe is now cheaper to sell to. Take advantage of your value by finding representative in these markets.

Make advertising show results
Get their attention. State your benefits clearly and believably. Get feedback. Motivate your customers to do something. Make sure your advertising is in line with your strategy.

Hire people who will contribute to bottom line
Keep your winners and make them partners. Always look for designers, engineers, sales, and leaders to make your business grow. The advantage of a recession is less competition hiring the best people.

Review your strategy
Does your current strategic plan match the changing economy? Be realistic, be opportunistic, and believe you can succeed. Others will just try to shrink their business and may hurt themselves. You can actually grow market share by being aggressive in going after business by creating value.

A recession is really just normal business. Just be focused on what needs to be done like normal, and do the hard work that gets missed when you are growing fast. Your people will overcome a recession if lead to face the problem. It is up to you to lead.