Taking the Right Business from Your Competitors

The quest for taking business from your competitors must be pursued expeditiously, but with proper caution.

Because of the times, much of the business of your competitors is not business you should take. In fact, that which you get from competitors most easily is, many times, their worst business.

Customers or clients taken from competitors who will not pay a fair price for your goods or services will only increase your challenges.

Consider, for example, the long time client of a competing law firm who suddenly finds you attractive. Is this a client who has sound reasons for changing to your firm…or might they just be looking for an opportunity to pick a fight with their existing firm so as to justify (in their minds) walking away from what they owe their existing law firm?

Or, is this a client which is rebelling against your competitor setting payment terms of the kind that you should be demanding in these times of economic uncertainty?

The quest to stabilize revenue declines, due to the downturn, must never overtake sound business judgment!

These days, almost every customer or client, which is not paying C.O.D., is a risk. Payment risk must be very, very carefully factored into your new client acquisition startegies. In these times where "cash is king," payment terms must be carefully established and then implemented.

Focus your new business generation activities on the very best clients of your competitors. And, do not lose sight of the important goal of being timely paid for goods delivered or services rendered.

Up Next: How to Capture Your Competitors’ Best Clients.

Taking Business from Your Competitors in a Downturn

Sure the economy has gone soft. In industry after industry, total industry demand is declining. For some industries, like -- for example -- the new housing industry, the decline is precipitous. But, for many, many industries, total industry demand is currently off by "only" 5-10%.

Now if you keep using your playbook from the good times (i.e., the same strategies and tactics), it is highly likely that you will experience a revenue decline of 5-10%, if not more. And for many industries, a loss of 5-10% in revenues can easily swing a profitable business to a money losing business. Ouch!

However, unless you have a significant market share (say above 50%), then a decline in total industry revenues need not translate into a loss of equal amount in your sales. It is time to take market share away from your competitors. Right NOW!

If your life depended on it, I fully expect most of you owning or managing a business could identify specific ways to take business away from competitors. Well your life may not depend on doing so, but the economic life of your business may very well depend on it!

The good news is that some competitors will not change their playbook out of a belief that this is just another media overreaction (it is not!). Others will not change because they are expecting (or at least hoping) that the downturn will quickly pass (it will not.) Others will be wedded to the strategies and tactics that made them successful and will be unwilling to make necessary changes. Others will be too kind hearted and unwilling to make the hard decisions. And, others will be ill equipped to devise winning strategies and tactics for these whitewater times.

The bad news is that some competitors will make changes, including some that could be just plain dumb…like lowering selling price to below their marginal costs. You don’t have to out hustle all your competitors…you need to out hustle enough to grow market share, profitably, in the face of shrinking industry demand.

In many industries, the winners have already started hustling more. Are you? Have you changed your strategies and tactics to fully reflect the downturn? Are you aggressively implementing your new plans? Do all of your employees understand the importance of having a much greater sense of urgency in implementing your plan? Are you, and your employees, embracing the needed changes, or fighting them?

Or have you resigned yourself that a market contraction is the death knell for your company?

The choice is yours!

Abundant Opportunities in the Recession of 2008 - 2009

Last week, I shared the six reasons why I believe the 2008-2009 recession will be longer and deeper than any of us hope, than the government is now publicly stating, and most economists are currently predicting.

Prophet of gloom? Hardly!

I believe that there are abundant opportunities to prosper, both financially and developmentally, during this recession. Planning how to do so must begin with a realistic assessment of the situation, hence the week-long series devoted to a situational assessment.

The challenge, for all of us, is that the actions that brought us success over the last decade are unlikely to bring us success in a radically different situation.

Financially, I believe prosperity will come to those who are involved with businesses that

1) provide goods or services that are specifically tailored to the downturn, or

2) provide other goods or services in a manner such that they are materially different than that provided by competitors.

Examples of the former would be businesses that deal with foreclosed homes, repossessed autos, defaulted loans, etc. etc.

Examples of the latter would be businesses that provide customers or clients with exceptional value. Consider, for example, the casual dining restaurant sector which is having extreme difficulties. Well, tonight I ate at an “all you can eat” salad/pasta bar that was jam packed. Literally, there was a five minute wait to be shown to your seat…on a Sunday evening, no less. For comparison sake, after dinner, I walked next door to one of the big name casual dining traditional restaurants and it had only a handful of customers. Ouch!

In the last decade, business success was much easier than it is likely to be in the next two to five years. This downturn will test the skills of all owners and managers. In a growing market, differentiation is important. In a declining market, meaningful differentiation is absolutely imperative.

Those owners and managers who can break away from past success patterns and plan and implement strategies attuned to today’s environment will do well. Perhaps not as well as in recent years, but still well.

The greatest challenge will be those whose business model is difficult to change quickly because of the nature of their industry. Executives in those industries will be severely tested.

Up Next: Over the coming week, I will be sharing specific strategies for tuning your business to win in this new environment. Tomorrow, I will address taking business from your competitors in a downturn.

The U.S. Recession Shows Signs of Becoming a Truly Global Recession

This is the final post in a six part series, running this week, on why you can expect that the downturn will be deeper and longer than currently expected by most. Over the past week, I have shared why I have come to this conclusion. Here is Reason #6.

The problems within the U.S. economy that need to be solved in order to slow the accelerating snowball and begin the return to a healthier economy are significant, in and by themselves. However, making the problems much worse is that the malaise attacking our economy has gone global.

On a daily basis, we are learning that more and more countries around the world are experiencing a recession. The economies of China, Japan and Korea have weakened. So too with countries throughout Europe. Russia’s economy has slowed. And even the economies of the oil rich countries of the Middle East are experiencing some discomfort as reduced demand and lower prices for oil occurs.

As if the U.S. economic problems were not difficult enough to fix, now the repair must play out on a world stage where consensus on any issue is always very, very challenging.

Those who say the U.S. government has more tools to use in avoiding a downturn of the magnitude of the Great Depression seemingly ignore that the U.S. does not control the world economy. We have become a country, like most, that is inextricably woven into the fabric of a global economy.

Further exacerbating the complexity of that problem is the specter of worldwide deflation…an economic force every bit as challenging as inflation…if not more so.

And even if all the economic policymakers were in agreement as to what needs to be done to strengthen the global economy, would respective political agenda’s foster consensus implementation? On a timely basis? I wish I could be more optimistic such would be the case.

So there you have it, six reasons why I believe the economic downturn will be deeper and longer than most are currently expecting. Deeper and longer than any downturn since the Great Depression. Regretfully.

I hope I am very wrong!