When Bad Times Are Good – Business Growth And Development
The Farmer Who Liked Droughts
When the season is good everything grows – including the weeds. They shoot out shallow roots to suck up the surface moisture and easy nutrient and so stunt the deeper rooted long-term cash crops. Weeds are opportunists. They flourish in good times, but when times turn tough, and water’s scarce, they don’t have the deep roots or the solid heartwood to survive. They die and become fertiliser for the hardier plants.
No, he was talking about his less resourceful neighbours; tax-break farmers who jumped into a rising produce market, bought new gear, ran a crop in with little fertiliser, no weed control, paid at the top of the market for the best breeding stock and let their feral pests run wild (into Curly’s immaculately-groomed property, mind you!). They neglected their dams and used their primary producer tax breaks to compensate for their inefficiencies and turn a quick buck.
Curly, meanwhile, cleaned his dams, nurtured his pastures, controlled his weeds, selectively bred his stock and culled his pests. Because he was continually investing, his input costs were higher than his neighbours but his yields were sustainably higher too. In good seasons, he socked his profits away for a not-so-rainy day, and continued to invest in his assets.
When the market turned, the get-rich-quick operators promptly failed, and their neglected lands, silted dams, shiny new equipment and exquisitely-bred stock were snapped up at the next clearing sale by – you guessed it – Curly!
Right now, I’m seeing this same cycle playing out in the broader business market. The new-comer opportunistic operators who jumped into rising markets for a quick buck, and the incumbent average operators who, despite their inefficiencies couldn’t help but thrive in a rising market with its fat margins, are failing. The business weeds are withering! And the Curly’s of the business world? Well, they are making a killing!
When the Going Gets Tough
We humans are funny creatures for we choose to ignore Nature’s lessons and expect our markets (which, incidentally, rely on Nature) to expand, and expand. Our economy has never grown in a linear fashion, but always in a cyclical one. It breathes in and it breathes out; it expands then it contracts. Without any changes to the underlying fundamentals, why would we suddenly believe that because it’s inward breath was a little longer this time, it would not eventually exhale – forcibly?
Smart operators anticipate cycles. That doesn’t stop them making hay while the sun shines, but it does stop them blowing the lot, and it does cause them to lay in stores for the Winter.
Jim Collins, business researcher of renown, in his latest book How the Mighty Fall says. “. . . our research shows that if you’ve been practicing the principles of (business) greatness all the way along, you should get down on your knees and pray for extreme (market) turbulence, for that’s when you can pull even further ahead of those who lack your relentless intensity.”
Here Endeth the Lesson
You’ll have to ask me another time what The Principles are, because right now the point I wish to make is this: If your market is shrinking you need to be grabbing a bigger slice of it – at someone else’s expense. You had best be improving your business right now because other operators less resourceful than you are struggling and will fail, and their market share will be up for grabs now, or shortly.
Now is the right time to capturing the demand that others are too weak or confused to be servicing, and better put some planning into how you will handle the surge when the market once more breathes in and your bigger slice of the pie expands, and your business comes out of this current downturn like a champagne cork out of the bottle!
Start planning now!
