Time to Change Gears
by Lindsey Norris
Throughout the recession, optimists have been happy to point out the benefits of recession to struggling business owners. Most of this advice has included “wait-and-see”: after the downturn, your weaker competitors will be winnowed out, formerly astronomical expenses will return to earth and the market will be yours for the taking. It’s good advice, but you must do much more than sit back and wait to reap the rewards of perseverance. First, you must shift your defensive, account-book-coddling approach, and put some offence back into your business plan. With that, we embark on a new Action Plan series for 2010 themed on how to make the most of the economic recovery.
Look for opportunities
The recession hasn’t affected every market and industry equally. Some have been much harder hit than others, and that means opportunity. You might think Doug Thiessen is crazy; the owner of Taurean Global Properties, a Canmore-based property management company, is currently buying up properties in undervalued markets, including Windsor, Ont., because of its 17% vacancy rate. “If we can accumulate a lot of assets at a reasonable price and fix our cost of capital with today’s interest rates, when the economy recovers, inflation will be fantastic for us.” Sounds risky? It may be, but that’s why it’s cheap. When you’re looking to grow, you’ll get more bang for your buck in undervalued areas.
Negotiate contracts now
In October, Spoon Me, a frozen yogurt company based in Salt Lake City, Utah, opened its first Canadian franchise, in Calgary’s Kensington neighbourhood. If you think opening a frozen yogurt shop in October in Calgary is a dubious proposition, consider the numbers. “This is a very good time to expand,” says Ryan Combe, Spoon Me’s founder. “The cost of entry is lower. We’ve been able to negotiate favourable lease rates, rates with food and equipment vendors, and construction costs are down. We’ve trimmed the costs of opening a new store down by 10 to 20%.” If expansion is part of your business plan, now is the time to do it.
Talk to your customers
Bank of Canada governor Mark Carney warned that the global economy is due for a “profound restructuring.” This is a nice way of saying that everything you thought you knew about your customers has changed. Have the people responsible for crafting your business strategy get out from behind their desks and interact with clients and customers, ask for input and pay attention to what customers say. If you think the changes in your target market are only due to the recession, think again; many of those changes are here to stay.
Find your comfort level
Maybe your post-recession plan is merely not to be left behind. Maybe it’s to increase market share. Or maybe you want to triple your growth, expand worldwide and take over the universe. (More than a few pundits have pointed out that the Wildrose Alliance Party is doing a pretty good job at the aggressive approach.) First, decide what you want to accomplish. It will affect every decision you make.
Gear up your workforce
Odds are you asked your employees to make sacrifices in recent months. But don’t expect the charity to continue when there are definite signs things are improving. In September, General Motors claimed it was losing managers to other companies and rescinded the pay cuts imposed on salaried workers. Let people know that you’re drafting a schedule for reintroducing bonuses and original pay scales. Don’t wait until your fed-up employees decide you’re taking advantage of them and start sending out resumés. As an added bonus, this will help you attract the best talent languishing among the ranks of the under- or unemployed.
Next month: Is now the time to refinance?
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