Exploiting Change

Whether as an individual, an entrepreneur, or an executive, there are a number of things that can be done to thrive in a chaotic economy. Within the bounds of prudent risk management, the best defence is always offence.

• Think of the worst-case scenario for your business in the coming two years. Identify as many threats as possible. It helps if you do this in a brainstorming session with colleagues or your senior leadership team. For every threat, identify at least one preventive measure and one contingent measure you can take. Implement the preventive measures as soon as possible for high-probability or certain threats. Create contingency plans for low-probability or uncertain ones and implement only when needed.
• Here is where offence comes into play. Again through brainstorming, identify as many opportunities as possible that could come out of the same scenario. In other words, push yourself to find profit-making opportunities no matter what occurs. These ideas have to be specific and actionable. Some examples:

1. One of my coaching clients is in the mutual fund business and it’s getting harder and harder to sell in the current environment. In the coming months and years, people will be looking for more security and safety in their investments. Together we identified some strategies to provide advice on budgeting, saving, and investing prudently in this difficult environment and to adjust product offerings accordingly. I also advised him to create a seminar on prudent investing for difficult times, which he can offer to various groups for free as a way to get in front of potential clients. The idea is to avoid the same old mantra of “buy and hold” and to differentiate him in a bland market space.
   
2. Management of an insurance company was concerned about losing clients to competitors. When they analyzed the threat, they realized that the likelihood of clients’ leaving was increased by their own inability to meet new coverage requirements. They realized they were letting an opportunity to increase premium revenue slip through their fingers and started to implement measures to meet the demand. Insurance companies are in the business of providing peace of mind and risk management more than just “insurance.” What new products and services can achieve these outcomes for people and organizations while generating new profit opportunities? Are there existing risks that are not currently being covered? Are there better ways of providing basic services to existing customers?
3. Only a few months ago, everyone was worried about labour shortages. Now, mass layoffs are making large numbers of highly qualified people available for employment in new sectors and industries. Companies can offer to move and even retrain people. The investment would be worth it, because these are workers with proven abilities.
4. As we say in French, “l’union fait la force.” Are there ways that entrepreneurs and non-competing small companies can get together to help each other out? This could involve entrepreneurs purchasing services together and negotiating favourable terms and conditions. It could also involve sharing basic technologies and support services. What if a small company shared its up-to-date network servers and software with other small local companies for a nominal fee, thus obviating the requirement for the others to upgrade? The same could be done with in-house professional services such as comptrollership and CFO functions, as only one other example.

• Don’t believe the predictions of pundits and the talking heads in the media. The people who are telling us that the economy will turn up after the second quarter or that the government stimulus package will work are exactly the same people who six months or a year ago were telling us that the economy was in good shape or that the credit crisis was merely a passing downtick. Most of these people are economists, politicians, and investment advisors. They aren’t bad people, but they are behind the power curve. It is much better to follow the signals you are getting from your clients, suppliers and industry competitors. Everyone who is experiencing a downturn now could see it coming in declining orders and lowered interest by buyers months, if not years, ago. What were the pundits saying then? Conversely, if things get worse, these same people will be saying that it can never get better again. That will be the time to look at your own signs and signals and to act on them.
• Take prudent risks. If you’re an entrepreneur, there is a good chance that you’ve already bet the farm at some point to launch your business or keep it going. What I’m talking about in this instance is moving slowly into a new product or service offering while continuing to operate in existing businesses. Probably the best way to do this is to offer new products and services to existing clients. However, if you do need to make a more radical move, it’s important to put the new initiative “in a box” so to speak, so it doesn’t bring down the whole house.
• Don’t become isolated. Stay in touch with leads, prospects, and clients. Talk to your suppliers. Create a discussion group with others in the same situation as you and meet on a regular basis to brainstorm ideas and get some perspective and encouragement. Find a mentor or hire a business coach. Create a board of advisors. Bring new blood into your board of directors, people who won’t just agree with you and toe the line. This is important for larger companies, but it is absolutely critical for sole proprietors and self-employed professionals. It’s easy to become a troglodyte in difficult times, but that is when you most need the support of friends and colleagues. You also need good ideas and perspective to identify opportunities and not just threats and risks.