How Tenacity beats Calamity in a Recession
If you live in Alberta, there is an “r” word you’re probably sick of hearing. “Oh, calamity! Oh dread! The recession is killing us!” There’s lots of negative media about it out there, in part because the media people themselves are having their own digital-is-killing-us typhoon; they are already in calamity mode… We’re writing this to give you some fresh thinking on the matter.
This year, Tenato is celebrating 20 years in business. We have seen our fair share of Alberta’s economic swings. The last downturn was partially responsible for us taking a long, hard look at our own strategy, resulting in a re-branding and great improvement in our services. These actions were extremely good for the business, and we would not have done them had the recession not made us question things. During this recession, we’ve been not only sustaining, but growing at a record pace.
What did we learn?
1. Economic downturns should only take out part of your client base, as long as you don’t specialize in only one industry or type of client. At Tenato, one of our clients was a consulting company that did a lot of oil and gas work. Their business was dramatically affected on that side, but they began a new marketing program to make inroads in other industries. The recession got severe just as they launched their new marketing program, and they had to tighten their budget somewhat, but they’ve still been able to keep it going. So, while they weren’t able to stop the effects of this recession, they will be well prepared for the next recession! Tenato’s business wasn’t deeply affected because we already had well prepared for this recession after the last one, and were well diversified.
2. Fluctuations in demand should only affect part of your service revenue, as long as you do more than one service. For example, at Tenato, fewer companies are doing rebranding work right now, but many want strategy or market research support as they look for opportunities to diversify. Likewise, if you have a high-end or luxury product line for which sales have softened, maybe offering maintenance or repairs for that service could be a way to generate revenue that is more persistent in tougher economic times, i.e. fix the old table instead of buying a new one? Give a small package, such as a diagnostic service of some kind, to prove your skill set and get you in the door.
3. A downturn is a great opportunity to gain market share. At Tenato, we were surprised to see one of our key competitors merge with another firm in the past six months, under which their services will be amalgamated. This means one less website domain competing for the areas on which we focus, so it is good news. Likewise in any industry, some competitors will feel pain in the recession. This a rare opportunity to build your market share without increasing your marketing budget.
4. If you are actually slowing down due to the recession, this is a great time to re-think your overall strategy. Ask yourself, “If I were starting the business today, what would its message be? How could I make it the “hot-new-kid-on-the-block”? Re-invent yourself as the ideal business you’d like to be. Think of Madonna – why has her popularity lasted for so many years? She keeps re-inventing herself! Now, this can be gut-wrenching; you have to give up your sense of what’s always worked and shed your pride. Six years ago, in the 2009-10 recession, we were in the same position, and had to re-invent our name, brand, and message. We also greatly expanded our offerings and team to ensure we were capturing the latest technologies. It was hard on the ego, and tough on the wallet, but that’s why we are still here, and even growing, despite this recession.
5. How about thinking more nationally or internationally? This is another way of diversifying. Pick a city or two where you don’t normally promote your service, and test the waters. If the competition there isn’t impressive, you can do one of a few things: compete with them remotely (fly in and out if needed), partner with them to boost their games, or set up your own office. At Tenato, we have gained clients both nationally and internationally, and it has really strengthened our business.
6. Use it to learn something new. If your business has slowed, invest in educating yourself or your team in something that will make you more competitive. Read business strategy books for inspiration (or continue reading more here on our blog). Go online and research the latest in your industry or a related one, and use your time to get up to speed on it. This can help leapfrog you ahead if you incorporate this knowledge into a new service or product offering. At Tenato, we used the last recession to unfold new techniques in online competitive research, SEO, and social media. Today, these are services we simply could not survive without.
7. If it’s survival that concerns you most, be humble and take action without hesitation. If you have no work for employees, they must be laid off. But, first see if any of them want to do sales (even on a commission basis) or if they are willing to be re-purposed in another role. Likewise with yourself as the business owner. When business is slow, you absolutely must put on your “sales hat.” Call all your past clients, prospects, and friends, and say hello– see how they are doing, and if you can do anything to help them. It’s a great excuse to touch base with people you may have neglected, and it will give you a boost. Chances are, it will result in some work for you as well. You can also put on your “marketing hat” and attend networking/industry functions, connect on social media, blog, and write white papers or that book idea you were previously too busy to get to.
I want to sum up with some wisdom from a person I really respect. It comes from Bob Taylor, co-founder of Taylor Guitars, in his book “Guitar Lessons,” which I read during the last recession, when I was feeling pretty beaten down about my business. Bob’s company is world-famous for their leading-edge guitars now (I have four of them, in fact!), but in the first 15 – 20 years of its existence, Taylor Guitars had many, many precarious moments (I strongly recommend you read the book!). Looking back on this, Bob said he often saw a pattern in business ownership. The first owners usually give up after 5 years or so – they sink in all their life savings and create something unique, but get so financially tapped out that they think it’s not longer worth it and sell to the second owners. The second owners pick it up and notch it up, making a little money, and building a client base, believing they’re doing a great job because they improved the finances so much from what the first owners had done. Then, the third owners come in with fresh eyes, seeing the potential to go national, or global. With their own pockets fresh, they are able to take the business to another level. The point? Why not stick through the 5, 10, and 15-year marks yourself, no matter how hard they are, and be your own “third owner”?
The R-word is a test. The best way to conquer it is with the T- word: tenacity… (ah, and not coincidentally, that’s just where the name “Tenato” comes from…)