Catalyst Strategic Consultants: Newsletter

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Re: Business has changed: How are you recalibrating?

We are well into this phase of the cycle. It is a cycle. It will come back: just not yet or as we knew it.

Now that we’ve had an up close and personal introduction to recession, what can one predict about emerging reality?

Many businesses will put up a shiny front, then suddenly collapse.
Some players will preserve their capacity, others will lose it; all will be dented; markets will reorder around these adjustments.
Government and public sector work will be a big factor; many don’t know how to deal with them.
Credit is going to be a continuing schmoz. Where ever credit funding has a place in a scenario [promised, contracted, required, whatever], it will trip you up. Suppliers will let you down – no fault.
Scrutiny of all business will be higher: scrutiny of what? Your credit, your supply chain, your own viability. There will be lots more “looking under your hood”. Why? Trust has been damaged.
Basics will come back 1st; discretionary, a distant second except for low cost comfort and diversion.
Transactions will be more “bit by bit”. In the boom, big blocks of work are handed over without thought in the rush to get on to the next opportunity. Prudence is making a comeback.
Some sectors [engineering, home building] will lead the downturn; some [commercial real estate] will lag.
Identity re-recovery – some businesses need to re-craft who they are in order to regain their validity and mojo.
Everything is a “free ball” - there is no such thing as a fixed cost.
Don’t give your long-term client a reason to fire you – e.g. continuing high prices to grab some margin.
Bring it on home. Local business you can know, touch and feel will have appeal.
Ostentatious, conspicuous consumption is over.
There still is money around and the world still needs to function.
Oil will come roaring back. Gas? Not so fast.

The point is not whether I’m right or that my reading is new or unusual. If these trends don’t seem obvious, they probably don’t exist. No, the point is that business is different and your way of rendering value needs to be recalibrated. Leaders need to be who their people need them to be! Out front! Not turtled, uncommunicative. As in ……

The best at profiting from recessions are businesses who get strategic in the quiet. They get their “brain trust” together and figure out the basic assumptions affecting them and how their profit making model can be altered to catch another wave as the economy sorts itself out. They settle on their new moves and make them now, in the low slack tide. The best time to invest in your own world is now. You know - “buy low, sell high”.

Use your advisory resources to the hilt so that you can see your world using other eyes and entertain radical shifts.

The lemmings are chasing the limited conventionally available work down the margin scale. We heard of a public sector job that attracted 43 bidders! Is anyone making money there? But in the press to survive, you may be fighting a rearguard action to stay alive. You may need our Turnaround Prescription: the rules of fighting for your corporate existence. Breaking even so we’ll be around to play another day – that’s fine. Having a template to guide you vs. going from pillar to post – priceless.

When Hyundai offers to take back your new car if you lose your job, they’re doing what’s needed now.

Doug Bouey

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