Duck and Recover E-Book

Steven S. Little

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 167

Veröffentlichungsjahr: 2009

Beschreibung

Business growth expert Steven S. Little gives you the real-world strategies you need to navigate your business through economic uncertainty If you're a business owner or leader, you're no doubt feeling inundated on all sides by the gathering forces of this financial downturn--shrinking revenues, tightening resources, anxious workers, plunging profits. When economic storms hit, it's the clear-minded and action-oriented leader that ultimately guides their business to success. In order to position your business for the growth opportunities ahead, it is imperative for you to address your most critical issues now. Duck and (re)Cover is the ultimate business owner's guide to prevailing and prospering through tough economic times. It questions much of the "conventional wisdom" we all hear about recessions and instead offers an irreverently common-sense approach to survival and growth in the midst of economic uncertainty. This book focuses on the most significant challenges and opportunities facing embattled businesses today. * Recommends specific, and effective strategies for keeping your business up and running, even if the economy continues to stall * Includes a wealth of been-there-done-that advice that will help you clear your own path to sustainable, profitable growth * Written by Steven S. Little, former president of three fast-growth companies and author of The Seven Irrefutable Rules of Small Business Growth Now is not the time for timidity. Instead, make the bold moves recommend here to not only weather the storm but to chart a course for your ultimate destination.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Introduction

WHY MY CONCERN?

Section I - Pressing Immediacies

Chapter 1 - What Is Your Reality?

OVERCOMPENSATION IS YOUR ENEMY

STATUS QUO IS AN EQUAL FOE

YOU ARE YOUR ALLY

Chapter 2 - Triage and Tourniquets

NOT FOCUSING ON ROOT CAUSES

NOT PRIORITIZING AREAS THAT NEED YOUR ATTENTION

NOT PUTTING NEW AND RECENT PROBLEMS IN PERSPECTIVE

NOT KNOWING HOW TO APPLY TOURNIQUETS

Chapter 3 - All Hail the Cash King

INDIRECT OVERHEAD COSTS

RENT

PAYABLES

RECEIVABLES

INVENTORY

PEOPLE

Chapter 4 - Keep Your Customers

ARE YOU OFFERING GREATER VALUE BEYOND JUST YOUR PRODUCT OR SERVICE?

ARE YOU MAKING IT EASY FOR YOUR BEST CUSTOMERS TO BE HEARD?

HOW WELL DO YOU COMMUNICATE APPRECIATION?

HAVE YOU CONSIDERED MY 40/20 RULE?

Chapter 5 - Plan for Action

Chapter 6 - TRUST and Your People

TIMELY

REALISTIC

UNSCRIPTED

SENSITIVE

TRANSPARENT

Chapter 7 - Enlist Outside Expertise

Chapter 8 - Maintain Your Marketing

BRANDING STRATEGIES

INNOVATION STRATEGIES

DISTRIBUTION STRATEGIES

SALES STRATEGIES

MARKETING COMMUNICATIONS (MARCOM) STRATEGIES

Chapter 9 - Price for Profit

ARE YOU OVER-RELIANT ON PRICING FORMULAS?

ARE YOU CHARGING A PRICE FOR EVERYTHING YOU SHOULD BE?

ARE YOU NEGOTIATING PRICE AT THE RIGHT LEVEL?

DO YOU MENTALLY SEPARATE PROFIT MARGIN FROM SALES VOLUME?

Section II - Growth Opportunities

Chapter 10 - Get Out of Your Bunker

GET FACE-TO-FACE WITH VENDORS AND CUSTOMERS

GET INVOLVED IN YOUR COMMUNITY

MAKE THE MOST OF TRADE SHOWS

GAIN WISDOM THROUGH INFORMATION

Chapter 11 - Fill Market Vacuums

Chapter 12 - Partner for Profit

DISTRIBUTION PARTNERS

PRODUCT AND SERVICE PARTNERSHIPS

MARKETING PARTNERSHIPS

PRICING PARTNERSHIPS

STRATEGIC ALLIANCES

JOINT VENTURES

Chapter 13 - Pursue Potential Acquisitions

Chapter 14 - Put Better Tools to Work

Chapter 15 - Green is Growing

Chapter 16 - Catch a Falling Star

NOW IS A GREAT TIME TO HIRE BECAUSE SO MANY MORE PEOPLE ARE LOOKING FOR A JOB

MORE PEOPLE WITH EXPERIENCE IN YOUR INDUSTRY HAVE BECOME AVAILABLE

MORE PEOPLE WITH A SPECIFIC SKILL SET YOU ARE LACKING ARE AVAILABLE

PEOPLE ARE WILLING TO TAKE LESS WHEN TIMES ARE TOUGH

BIG BUSINESS STARS ARE POUNDING THE PAVEMENT

Chapter 17 - Train the Talented

Chapter 18 - Revisit the Rules

STRONG SENSE OF PURPOSE

OUTSTANDING MARKET INTELLIGENCE

EFFECTIVE GROWTH PLANNING

CUSTOMER-DRIVEN PROCESSES

THE POWER OF TECHNOLOGY

THE BEST AND BRIGHTEST PEOPLE

SEEING THE FUTURE MORE CLEARLY

Index

Copyright © 2009 by Steven S. Little. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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eISBN : 978-0-470-53155-6

For my Father, Robert Palmer Little (aka “Bob the Navigator”) who never steers me wrong.

Introduction

Stark Realities

All generalizations are false, including this one.

—Mark Twain

It was approximately 6:00 A.M. PST on October 14, 2008 when I discovered that a great many so-called experts had been wrong. Allow me to explain in full, as the lesson learned here is one that you and I should never forget. Indeed, this one example represents the overriding lessons to be learned from this entire book.

Throughout 2008, the consensus among the press and the pundits was that we were either in, or would soon be entering, an economic recession. The warning signs were all in place: rising unemployment, falling consumer confidence, and aggressive interest rate reductions by the Federal Reserve. Home sales in the United States were stagnating and values were falling. By mid-2008, various polls indicated that a majority of American consumers believed we were in a recession, and a wide array of public and private sector reports concurred.

By October, the precipitous stock market meltdown left little doubt in my mind that things were getting uglier. Yet our nation’s business owners weren’t ready to use the r-word quite yet. Just prior to the 2008 election, many experts and economists were pointing to increasing business owner optimism as a sign of an overall bottoming out of the economy. The National Federation of Independent Business (NFIB) monthly index of owner optimism actually improved from August through October. I began to hear a decidedly upbeat attitude among business owners at the events where I was asked to speak. “This thing is going to be over before you know it” and “It’s all just media hype” were common refrains.

I could not share their buoyant tone. In my mind, the likelihood that we were headed for a significant downturn seemed very real, based on the unprecedented nature of the financial collapse. Being a self-described business growth expert, I knew it was important for me to recognize that, after years of speaking and consulting on the subject of growth during an economic boom, I now needed to dust off some sage advice on recessions. I had certainly weathered a few myself, and it was time to help business owners and managers prepare for the gathering storm.

Luckily, I seemed to have some real answers for business owners, based on my own experiences and more than 20 years of study regarding what works and what does not. This would be the fourth downturn I’d been through, and I felt compelled to share the things I had learned.

One idea I was espousing seemed to garner a lot of attention. I suggested to anyone who would listen that it was a proven fact that maintaining your advertising budget through a downturn is one of the best ways to grow your business over the long term. Everyone seemed to agree with me (and congratulate me for my profound wisdom), and why wouldn’t they? The idea makes a lot of sense.

The argument for maintaining your advertising budget in a downturn is compelling: Most of your competitors for customer mind-share will cut their marketing budgets, allowing you to stand out and thereby putting you in a better position to prosper when things get back to normal. Due to the laws of supply and demand, marketing communication costs often decrease in a recession, making your reach more efficient than it normally would be. Besides, a whole host of studies had proven this approach to be correct. Or so I thought.

October 2008 proved to be the busiest month I had ever experienced as a business speaker; I presented in 11 cities in just 15 days. My overall message of growth, coupled with a new focus on rules for a recession, was working. Audiences were engaged like never before. Apparently, I was really helping business leaders. I have to admit that I was feeling pretty good about my message.

But on the morning of October 14, I began to question that feeling.

The day began innocently enough. After having flown to the four corners of our continent for seemingly weeks on end, I caught a travel break. I had two events back-to-back in the greater Phoenix area, spaced one day apart. I was still on east coast time when I woke early on my day off to hear an economist on Bloomberg News posit negatively on the newly proposed federal bank bailout. I wasn’t sure I had heard it all correctly. I quickly checked WSJ.com and found the following headline:

U.S. to Buy Stakes in Nation’s Largest Banks

That article went on to explain that that the move “intertwines the banking sector with the federal government for years to come.” After weeks of speculation, the genie was now out of the bottle. Were these United States of America, land of free markets and Adam Smith’s principle of “the invisible hand,” trying to become France? I didn’t know exactly what it all meant (and I’m not sure that anyone really does to this day), but I did know, in that moment, that nothing would ever be the same after this. The time had come to question everything about business as usual in this country.

The first thing I did was to look through the presentation I had built for the following day. Was it all still true? Did I still believe what I was planning to say to a group of 300 business owners? My name, the presentation title, and the date were all accurate. My first couple of rules held true because, as we will later learn, they are irrefutable. The first point that made me think “better check this out” was my assertion that maintaining your advertising budget in a recession was a proven strategy. I knew it was a truism, but also thought it would be best to document the proof.

I had a vague recollection of what I needed to find in order to verify the assertion. A simple Google search (I believe my keywords were “advertising,” “recession,” “study,” and “sales growth”) helped me find the information I needed. Sifting through the seemingly endless pages of results, it was clear that my foggy memory had not failed me. McGraw-Hill Research Laboratory of Advertising Performance Report #5262 was cited by almost every one of my Google hits.

Eureka! Here was the proof! In the face of a financial world now turned upside down, could it be that the real world of industry and commerce still had some absolute truths on which we all could depend?

My mind quickly returned to 1986, when, as a junior account executive for a regional advertising agency, I had first read the then new report by the prestigious publishing giant McGraw-Hill. Now, here it was again, all these years later, allowing me and thousands of others to make the unequivocal case that maintaining advertising spending through a recession causes sales growth.

Yet, as I began to dig a little bit deeper that fateful morning, I realized there was one glaring problem. The report doesn’t say that at all.

What does report #5262 really tell us? The first sentence of the study is both succinct and insightful.

. . . a McGraw-Hill Research Analysis of 600 industrial companies showed that business-to-business firms that maintained or increased their advertising expenditures throughout the 1981-1982 recession averaged significantly higher sales growth both during the recession and for the following three years than those that eliminated or decreased advertising.

How much sales growth? The report claims 256 percent greater sales growth for the aggressive advertisers by 1985. Wow! This is one powerful finding. So powerful that you can now find thousands of references to it, from peer reviewed academic journals to online business blog gers. Do your own search and see what I mean. I simply picked a random page number (say page 33) and looked at the links. You’ll undoubtedly find a range of examples such as the following that cite the magical properties associated with report #5262.

• A New England radio station touting the report as proof of why their local clients should keep spending money with them.

• A public relations firm in the U.K. saying the report demonstrates the importance of all marketing communication efforts in a downturn.

• A freelance copywriter who specializes in promoting the arts citing the report as evidence of the need for orchestras and theater companies to spend more on marketing in this recession.

WHY MY CONCERN?

Let’s start with the broadest and most important thing we can take away from all this. Our lesson centers on the importance of truly understanding cause and effect. For centuries, big thinkers from Socrates to Einstein have struggled with the notion that one action (the cause) can be proven to produce another action (the effect.) While I am far from being a philosopher or nuclear physicist, I have learned that proving causality is rarely as simple as it seems.

If you ever hope to achieve a specific outcome in your business, then logic dictates that you thoroughly understand what causes a desired effect. For example, we are looking closely at report #5262 and trying to better understand how it applies to you and your business. Yet this is simply one example being used to shed light on how easily prevailing wisdom can obscure your vision. The time has come for you to question these closely held beliefs in all aspects of your business, whether financial, operational, human resource management, and yes, advertising initiatives.

So, can we say for certain that maintaining or increasing advertising in a recession (the cause) results in significantly higher sales growth (the effect)? Near the end of report #5262, the professional researchers at McGraw-Hill provide us with an unambiguous answer to our all-important question: “This analysis does not permit any statement of causality.”

The sentence is not set in fine print or hidden with an asterisk at the bottom of the report. In no uncertain terms, the researchers are saying that we cannot conclude that maintaining or increasing advertising in a recession causes sales growth. They are also saying that one cannot conclude that decreasing or eliminating advertising in a recession causes a company’s sales to fall behind. Instead, they rightly pointed to a statistically significant correlation between advertising and sales growth. Yet, as anyone who has ever muscled through a statistics class knows, correlation does not imply causation.

See if you agree with my logic here. While it is impossible to look back and know for sure, I am willing to bet your annual advertising budget that the following statements are also true about those 600 businesses studied in the recession of 1981/82:

• Firms that maintained or increased their landscaping budgets in the recession experienced superior sales growth through 1985.

• Firms that maintained or increased their annual holiday party and Fourth of July picnic budgets in a recession experienced superior sales growth through 1985.

• Firms that maintained or increased their new office furniture budgets during the recession experienced superior sales growth through 1985.

I think you see where all of this is going. When entering a recession, companies that are doing well are in a better position to continue to do well. Firms that were already on shaky ground during good times are most likely to feel the adverse effects of a sudden downturn. Firms that are experiencing sustainable, profitable growth are more likely to be able to afford more comfortable office furniture. However, increased spending on new office furniture does not cause sales growth.

Besides the obvious problems regarding causality, a simple reading of the executive summary provides us with a host of other potential problems. Start with the fact that the study looked only at publicly-held entities. The average sales per company studied was over $1 billion a year, with average advertising expenditure per company greater than $40 million annually. Does that sound like your business? The study also concentrated on companies that had survived the recession. In other words, they had to have sales data in 1985 in order to be included. So by definition, everyone studied survived beyond the recession. How about this for a logical conclusion: It doesn’t matter if you increase, decrease, or maintain your advertising budget . . . at least you’ll survive!

If you own a relatively large industrial company with a business-to-business advertising bent, and you believe that understanding actions taken in the early 1980s might be useful in furthering your cause in the twenty-first century, then by all means, get this report and read it.

For the rest of us, it is important to recognize that the information in the study is simply not actionable. It is, at best, merely anecdotal information that has been inexcusably misused to support arguments that couldn’t be further from the actual findings (through no fault of McGraw-Hill’s, I might add).

What are some of your closely held beliefs about the best ways to navigate the choppy waters of a recession? Do you know for certain whether they are really true? Were they once true, but could they have lost relevance in this uncertain environment?

As the sun began to rise in Phoenix on the morning of October 14, 2008, I put all this together and realized that we had been wrong about far more important issues than just advertising. The experts on Wall Street had been wrong. The experts in Washington had been wrong. So too were thousands of self-proclaimed experts like me who, with nothing but the best of intentions, were guilty of citing a study that didn’t actually say what everyone wanted to believe it said. It was time to question everything.

For an embattled business owner like you, the lesson of Report #5262 is simple: In a crisis, conventional wisdom often defies common sense.

Section I

Pressing Immediacies

The term “duck” can mean a lot of different things in different contexts. I want to be sure that any embattled business owner is clear on my use of the term here.

My father, an ex-Air Force man and present-day athlete, ends every phone conversation by telling me to “keep my head down.” It’s good advice; keeping your head down is one way to avoid trouble. By putting your head down you present a diminished profile and therefore a smaller target. Thinking about Dad’s signoff in the context of this book, though, makes it take on an added meaning.

Business authors are accused of overusing sports analogies, but in this case they are the most effective way to explain what I mean by the word “duck.” In nearly every kind of athletic activity, there is a ready position that requires you to duck. Baseball infielders crouch, lowering their center of gravity and preparing to react at the crack of the bat. Football linemen come into a three-point stance in anticipation of a pounce off the line. Boxers, golfers, wrestlers, sprinters, swimmers, tennis players, and martial arts combatants all duck in their own way. It puts them in the best position to release a focused, explosive movement when the time is right.