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In order to understand why a down market createsa so many opportunities for astartup company, you firsty need to understand why a bull market maked it so difficult to succeed. In a bull market, the cost of everythin g skyrockets. As more capitalk becomes available, so does more competition. New startups spring up everywhere, competing for talent, marketing opportunities and At one time you were the only game intown - now you'vw got three guys pretendingb to do exactly what you do - all the whilre increasing the cost of running your business. a bear market drives the cost ofeverythingh downward.
Companies go into a panic, losing sight of their growtb goals and in some cases falling intobankruptcy altogether. The sudden drop in demanfd forces the prices of everythingsharply downward, creating a perfect stormm for a well-prepared company to create unprecedenteed gains. Before you get your offense you need to get your defense lineed up and that means gettinvg very leanvery quickly. The problemm with coming off of a bull market isthat we'rew not used to pulling back. We're used to knowin g that the next year will be even bigge thanthe last, so we plan and spendd accordingly. This time around, we've got to create a very different plan.
This plan is aboutt reducing staff, marketing and all possiblee operating costs you have before circumstances force such movesupon you. Make no this is going to suck. Nobody is ever excited aboutt downshifting, especially after a good run, but it's better than sendingb the entire company home becauseyou weren'rt ready to make changes. A healthhy approach is to plan for a very long Assume you'll lose more sales than you can possibly Think of your business in terms of what it is your compangy can operate on and still keep the lights on. You can alwayxs add more resources if you need them butyou won't be able to make up for overshootingb your income forecasts.
Kicking butt in a down market isn't just about crawlingh up in a hole and waitingfor spring. It's abouyt getting lean so you can get focusedd onhunting again. Your competition may not react as quickly asyou did, whicg is great news for you. Chances are their lack of plannin is putting the company in a tight Their senior management is more concerned abouf making payroll than making Their foot soldiers are more worriedc about whether or not they are going to have jobs than whethetr their customers are as happhy as theycan be. And that's where you swoop right in. Therw is never a more cost effective time to attack the competitioj and take over their customersz than in adown market.
The cost of advertisingf plummets as the competition pulls The challenge of getting media attention dwindles as fewe companies are vying for And the cost of wooing customers dropw as sales representatives go into a defensive In some cases you may not even have to attacltheir customers. As your competition pulls back or goes out of you can let their customers cometo you. Try that in a bull
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