Do you remember when Chicken Little was regarded as a complete neurotic with an aggrandized sense of fear?  I do, but it feels like a lifetime ago.  These days it isn’t just the fabled chicken fretting; everyone seems frantic, yelling about how the sky is falling.

Well, I for one am tired of the doom and gloom.  It is defeatist and trite.  If you are looking to sulk then be sure to visit one of the thousands of pity parties being thrown in boardrooms, bars, and basements all across the country.  Otherwise, I suggest shifting focus to the flip side.  Like risk and reward, threat and opportunity are different sides of the same coin.  In my experience, threats can push people into a paralyzing state of denial, while opportunities are more likely to mobilize and energize people.  So let’s try talking about opportunity for a change.

I don’t mean to trivialize the realities of today’s battered marketplace.  Entrepreneurs and small businesses are indeed being squeezed by the two-headed monster that I call The Crecession – a ruthless combination of the credit crisis and the global recession.  But what are small business owners really doing about it?  I suspect that many have spent too much time looking up at that cruel, falling sky asking “why me?”  These people are likely rendered frozen by the threats they see surrounding them.  A far fewer number view the current economic environment as an opportunity.  These entrepreneurs are the ones combing through their businesses in search of inefficiencies and problem areas, making changes accordingly.  Which do you expect to still be in business in 2010, the opportunists or the defeatists? 

The Crecession has undoubtedly brought you some pain, but have you considered that it may be a necessary evil, like some foul-tasting medicine?  Can you see the opportunity in spite of all the obvious wreckage?  Today’s environment is the ultimate test of your company’s viability.  Almost any mediocre business concept can survive during an economic boom cycle, but in a downturn flawed businesses are quickly exposed and weeded out.  Don’t hesitate to analyze your business in light of all we’ve learned in 2008.  You can be sure that your competitors will do it for you if you delay, and I doubt that they will use their finding to help you.  Be first to recognize issues by anticipating rather than waiting and reacting.

Here are some opportunities to consider:

•    Economic downturns can highlight holes in your business model
     o    Take off your rose-colored glasses
     o    Where has your business been hit the hardest? 
     o    Innovation is often sparked in downturns because people demand efficiency and value-add

•    Work with vendors and clients to find mutually beneficial agreements
     o    Remember that your customers and suppliers are probably hurting too
     o    Be creative and flexible
     o    Can you renegotiate long-term contracts? 
     o    Consider flex contracts that adjust up in boom times and down in bust times
     o    Logroll; if you give a little in an areas where you can, you may get something of more value to you from your counterparty

•    Look at the value chain, in terms of risk management, and how it applies to your business
     o    Inbound logistics, operations, outbound logistics, marketing/sales, and service
     o    What is your value proposition?  Why should I use your company?  Where can you add value for clients?
     o    Remember to consider both value creation (revenues) and value capture (profits)
     o    How well are you growing revenues?  How efficiently are you converting those revenues into profits?  (the latter is often overlooked despite its obvious importance)

Don’t look to the sky for answers.  Don’t rush to join the ranks of the downtrodden.  Now is the time to attack.  What holes has The Crecession poked in your business model?  Has it shed light on specific vulnerabilities of your business?  What has it shown you about your marketplace that you can exploit?  At worst, you may find it’s time to begin working on an exit strategy, but even then at least you would be taking control of the situation instead of ignoring the inevitable.  At best – and more likely in my opinion – you’ll find answers and avenues to success.  But you must be willing to ask yourself the questions. 

I understand that you have your hands full trying to maintain daily operations.  Everyone’s immediate goal is to stay afloat, but remember that you also have to look forward in order to spot opportunity.  Look for ways to reposition your company and differentiate from competitors.  Try to anticipate what your competition may do given their current position, and counter accordingly.  You stand to benefit when the dust finally settles.  Now is the time to improve your offering and fortify your business so that it can stand the test of time.

Chicken Little was no Nostradamus.  Stay optimistic and opportunistic.  Don’t hope for better times; use a pragmatic approach to ensure them.  You’d be surprised how much improvement can come from asking yourself the simplest of questions.

Posted by Andrew Deutschmann, MBA Consultant
 

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