The crane, rigging and transportation industry continues to thrive in most parts of the United States. But in some cases, the subprime loan debacle, decreased consumer spending, a weak housing market, and the rising price of oil have caused a general economic decline in many industries.
A recent survey conducted by Duke University found that 54% of the chief financial officers surveyed think the economy is already in a recession, and they do not expect it to recover until 2009. According to the National Bureau of Economic Research, the last recession occurred from March 2001 to November 2001, and prior to that a recession did not occur in the United States for 10 years.
Technically, a recession is described as a decline in the Gross Domestic Product for two or more consecutive quarters, which has not happened yet. The bottom line is that an economic slowdown can have the same painful effects on our households and businesses.
Here are some basic tips to consider when it comes to dealing with an economic slowdown. The type of business and area of the country you are located may alter how these tips affect your company.
Basic economic slowdown tips:
Examine your business planKeep your company mission and core competencies. Only consider changes that make long-term business sense. Tightening credit terms may open the door for competitors to grab some of your business. Business plans based on panic reactions normally have negative results.
Marketing paysYou may be tempted to stop spending money on marketing and advertising. Do not stop marketing – this will lead to a downward trend in your business. You need to continue to obtain new customers. Look for alternative and less expensive ways to keep your name in front of your customers. Internet marketing and sales are taking over the industry. If your company's website is a brochure rather then a sales tool, you are missing out on the latest, most effective marketing tool. Some SC&RA members have become experts at obtaining sales leads from internet marketing. Others have not learned the dynamics of this marketing tool.
Pay attention to your working capital and stay on top of unpaid invoices. Conduct credit checks on all new customers. A couple of bankrupt customers could create difficult times for your business. Having cash helps insure stability, continuity and your company's ability to seize opportunities. You may want to consider restructuring debt. Remember, it is easier to borrow money when you do not need the money. If you wait, it may become more difficult to obtain the funds you need to grow your business.
Make an acquisition
When the economy slows opportunity sometimes presents a fire sale. You may have a chance to purchase a competitor by taking over its assets at a very low price. Look for these opportunities that will put your company in a much stronger position when the economy begins to thrive.
Evaluate your employees
This is a good time to evaluate your employees. You will need a strong employee base to maintain stability and growth. But now is the time to release the employees that are not contributing. The workers that have not met your expectations need to be let go.
Be sure to continue to communicate with all management and employees. They need to be assured of the company's future and what is expected for your company to remain a leader in the industry. Address all issues, worries and rumors directly. Your company is only as strong as the people you having working for you. Do not lose them to your competitor.
Make new alliances
Joint ventures with strategic partners may add investment capital, a competitive edge, employee expertise, and an opportunity to enter new markets and reach new customers.
Even if your business has not been negatively impacted by the slowing economy, now is a great time to assess how you would deal with a slowdown should it come to your industry or your region. What better time then now to examine your operations? Now is the time to better manage assets, increase safe productivity, control spending, improve cash flow, and take advantage of tax breaks. Place particular emphasis on practices that need improvement to make your business more efficient and to allow management to focus on operating policies and statistics.
Rainy day fund
And finally, the last tip I have heard from company leaders in the crane, rigging and transportation industry is simple and effective: “Be sure to save for a rainy day.”