As a friend of mine said recently, when someone is going down, someone else is coming up. We’re seeing that today. In 2008 we saw a number of companies go under. It seems to me that most of them found their niche, fame and fortune in the rising tide of the internet and debt driven consumerism fueled by rising home prices and easy access to credit. Those companies were myopic in that they didn’t take the time to look down the road. If they did so they would have seen that their business model would only remain viable as long as credit and real estate conditions stayed the same.
Starting in late 2004 and regularly through 2005, alarm bells were being rung by the UCLA Anderson Forecast, and other leading think tanks. The information was there. We were living an illusion of wealth. Unfortunately, that means many of the businesses we’ll see go bankrupt in 2009, probably weren’t real businesses. I read an article about a poor lady who is being forced to close her hand picked pear business. After years of taking home a six figure salary, she’s living off of credit cards now. My heart goes out to her, but on the other hand, would anybody who was based in reality think that they had a sustainable business selling pears?
Granted, I’m using an extreme example but my point is valid; her business, as is the case with many existing businesses today, was rooted in the illusion that we would always have an endless supply of luxury dollars to throw around.
Starting a business? Don’t be seduced by easy access to low hanging fruit, if there is any left. If another great opportunity to monetize appears like the Wall Street, Internet and Real Estate bubbles, know the economic reality for what it is so that you can formulate a cogent, coherent plan for the future. Use your successes as a springboard for sustainability.
A lot of mortgage, real estate, e-commerce, and retail businesses made breathtaking amounts of money, and they spent it all. People didn’t save and neither did businesses.
Right now is the time for business to invest in advertising, marketing and in-house improvements meant to separate, distinguish, and build their brand; while delivering an improved and more positive shopping experience.
Use this recession to leapfrog your competition.
As excerpted from a recent MSNBC article; “I think 2009 is going to be a bloodbath,” said Scott Testa, a marketing professor at St. Joseph’s University in Philadelphia. “I think it’s going to be very, very ugly.”
The shakeout among companies this year will give sturdier brands a chance to shine and set them apart from their less-than-prosperous counterparts, experts said.
Economic Darwinism will mean only the strongest stores survive, and they’ll use the downturn to get more powerful.
“The really smart companies, when things are bad, take the opportunity to really grow their brand,” he said.
Companies will have to find ways to stand out and that includes making sure customers picky about where they spend their money have a better experience, Rodriguez said.
“The brand is going to have a bigger opportunity to stand out and to articulate a promise and to deliver the experience, said Rita Rodriguez, chief executive for the U.S. division of The Brand Union, a firm that helps companies create brand identities. And it’s going to have to do that in 2009.”