The Business Review (Albany): Starting a Business : Business Advice

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In order to understand why a down marketr creates so many opportunities for astartupl company, you first need to understandc why a bull market makes it so difficulgt to succeed. In a bull the cost of everything skyrockets. As more capital becomesw available, so does more competition. New startups sprinvg up everywhere, competing for talent, marketint opportunities and customers. At one time you were the only game intown - now you'vw got three guys pretending to do exactl what you do - all the while increasing the cost of runningh your business. Conversely, a bear market drivea the cost ofeverything downward.
Companiez go into a panic, losing sight of their growt h goals and in some cases fallinbg intobankruptcy altogether. The sudden drop in demand forcezs the prices of everything sharply creating a perfect storm fora well-prepared company to creater unprecedented gains. Before you get your offens together, you need to get your defense lined up and that meanas getting very leanvery quickly. The problem with cominvg off of a bull market isthat we're not used to pullinh back. We're used to knowinbg that the next year will be even bigger than the so we plan andspend accordingly. This time we've got to create a very differenrt plan.
This plan is aboug reducing staff, marketing and all possible operatint costs you have before circumstances force such movewsupon you. Make no mistake, this is goinv to suck. Nobody is ever excited abourt downshifting, especially after a good run, but it'ws better than sending the entire company home becausewyou weren't ready to make A healthy approach is to plan for a very long Assume you'll lose more salese than you can possibly forecast. Think of your business in terms of what it is your compangy can operate on and still keep thelightzs on. You can always add more resourceds if you need them butyou won't be able to make up for overshootingh your income forecasts.
Kicking butt in a down market isn' t just about crawling up in a hole and waitinffor spring. It's about gettinfg lean so you can get focused on hunting Your competition may not react as quickly asyou did, whicbh is great news for you. Chances are their lack of planning is putting the companyu in atight spot. Their senior managementg is more concerned about making payroll thanmakingh acquisitions. Their foot soldiers are more worried aboug whether or not they are going to have jobs than whetheer their customers are as happy as theycan be. And that'ds where you swoop right in.
There is never a more cost effective time to attack the competition and take over their customers than in a down The cost of advertising plummets as the competition pulls The challenge of gettint media attention dwindles as fewer companies are vyingfor attention. And the cost of wooingh customers drops as sales representativews go into adefensive tailspin. In some casees you may not even have to attacjktheir customers. As your competition pulle back or goes outof business, you can let theifr customers come to you.
Try that in a bull