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Hot or cold economy – does it matter?

During the recent incredible economic boom, there were a tremendous number of bankruptcies, failed businesses (not just dotcoms) and the outplacement industry thrived. Many business owners get rich during downtimes. What gives?

Good companies, with good management, find a way to do well even in the worst of times. This crosses industry lines, geographic borders and size of the business. Here’s two stories that show what can be done.

Many companies did very well in the late nineties. Many can trace their success to the fact they were ready for it. When it’s up, ride the wave. When it’s down, strategize to thrive.

John Hoyt owns Picture Source, a Seattle-based company that provides art to retailers and corporate customers. Like many companies, Picture Source must constantly re-invent itself and strive to optimize the balance between production and marketing.

For example, within the last year they revamped their production operation, increasing efficiency by 25%. That means the same people and machines now produce 25% more product every day (picture framing, packaging the art for shipment, etc.). It’s now the marketing department’s turn to generate more sales, to keep the production line working. As with most companies, once marketing kicks in, it will be time to improve or expand production to keep up.

John uses the slower times to plan. John and his management team concentrate on three areas:

·        Knowing who you are (as a company). This includes defining goals and objectives, allocating resources and monitoring the results.

·        Understanding the customers and the sales reps. They’ve found it’s important to re-evaluate what makes their customers tick and make sure they are supporting their needs. They make their sales reps aware that Picture Source cares for them and try to revitalize how the reps sell. They encourage their reps to do the same evaluation on their customers.

·        Trying to slow down and not move too fast. John has found, like many of us, that moving too fast can be as dangerous as not moving at all. This is a good time to tweak margins, find out how people operate in a different situation and learn more about the little intricacies that make the company what it is.

To position the company and prepare for another round of growth, John hired a high-powered national sales manager. This person has the ability to open new markets, increase output from the existing reps and free up John’s time to use his creative talents. It’s scares John when he thinks about how much business this new person must create to “pay his way.” However, it’s a necessary step to keep the company growing and innovative.

A tried and true strategy to success, no matter what the economic climate is to provide incredible value. For years, Seattle Publishing, based in Everett, was a standard contract publisher, a “publisher for hire.” They help clients, such as the East King County Visitors and Convention Bureau, design and produce visitor guides, trade journals, directories, magazines and websites.

Paul Clark and Jay Stilwell are the owners and during the process of producing these products, they noticed many clients struggle with how they managed content. It took some clients months to do things that Paul and Jay knew they could do much faster using a computer.

Coupled with their love of technology, this insight led them to make a shift into content and graphic management. They developed software (Gutenbergä) that links databases with desktop publishing. As publishers, they understood where people fit in (to make the product esthetically pleasing). There system creates a final product that does not look like a computer did it.

The result is an incredible amount of value to their customers. They’ve initially targeted companies producing catalogs. Here’s some of the benefits available to their customers:

·        Lead times are slashed from months to weeks.

·        Changes are routine, not a time for crisis.

·        Costs drop dramatically.

·        {Experience shows] Companies will produce catalogs up to 35% larger because of the time and money savings (which leads to referrals from printers who like to print more pages).

·        Seamless interaction between paper, website, intranet and CD-ROM.

Picture Source uses a strategy of regrouping during slower times. Seattle Publishing provides tremendous value so it doesn’t matter if times are good or not (and may help them as money becomes tighter). Both strategies allow them to not be as concerned as others with the economy.

© Copyright John Martinka 2000. All rights reserved.