Hunkering Down In A Recession

Look around you – even though the recession and global financial crisis seems to be easing somewhat, there’s still business that are going bankrupt and closing every day. If you’ve survived this long, congratulations. It’s not easy.

In any downturn, there tend to be three things that happen to companies:

  • They don’t manage to sustain themselves, they run out of money, and dissolve or sell off.
  • They “hunker down” and manage to survive, and emerge as a weaker version of their former selves.
  • They are more aggressive, position themselves for the new reality, and emerge as the new leaders.

Many people think that the difference between these last two options comes down to luck, cash reserves, and loyal customers, but that’s really not the main story. What makes industry leadership change hands is that a few companies still manage to think creatively, despite the recession, and make careful choices based on a new and different reality.

Let me use an example that’s come to mind recently. The construction industry here in the US is still in very bad shape, and many companies are gasping for air. But I can now see a difference between those who are assuming that we’ll eventually return to the market of five years ago, versus those who realize that the nature of the market has permanently changed.

I don’t mean that we won’t see a return to growth in new residential and commercial construction. We will. But it’s also true that:

  • We will have a huge, huge backlog of foreclosed and underutilized properties, which means that much more money will be spent renovating those buildings than for new construction.
  • There’s a strong shift toward energy conservation, so companies who have invested to build their expertise in LEED and other technologies should be rewarded with more demand.
  • The structure of financing has become much more rigorous, because governments have recognized that easy debt caused people to take too many risks, triggering the recession.

I believe that each of these signals a change in the basic structure of construction and related industries, and the strong leaders of the future will be those who position themselves to be the best choice in this new reality. You may not like it, but there’s always things about the market that you have to work around.

What’s the new reality in YOUR industry?

Carl Dierschow
Small Fish Business Coaching Fort Collins

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