Tampa Bay Business Journal: Starting a Business : Business Advice

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In order to understand why a down marke t creates so many opportunities for astartup company, you first need to understanr why a bull market makew it so difficult to succeed. In a bull the cost of everything skyrockets. As more capitao becomes available, so does more competition. New startups sprin up everywhere, competing for marketing opportunitiesand customers. At one time you were the only game intown - now you'v got three guys pretending to do exactl y what you do - all the while increasintg the cost of running your business. a bear market driveds the cost ofeverything downward.
Companiee go into a losing sight of their growth goals and in some cases falling intobankruptcy altogether. The sudden drop in demanc forces the prices of everything sharply creating a perfect storm fora well-preparer company to create unprecedented Before you get your offense together, you need to get your defense lined up and that means gettinv very lean very The problem with coming off of a bull market is that we'rre not used to pulling back. We're used to knowing that the next year will be even bigged thanthe last, so we plan and spend This time around, we've got to create a very differentf plan.
This plan is about reducingt staff, marketing and all possible operating costsz you have before circumstances force such movesupon you. Make no this is going to suck. Nobodyu is ever excited about downshifting, especially afterr a good run, but it's bettet than sending the entire company home becauseyou weren't readyh to make changes. A healthy approach is to plan for a very long Assume you'll lose more sales than you can possibly forecast. Think of your business in terms of what it is your companh can operate on and still keep thelighta on. You can always add more resources if you need them butyou won't be able to make up for overshootiny your income forecasts.
Kicking butt in a down marke isn't just about crawling up in a hole and waitingfor spring. It's about getting lean so you can get focused on hunting again. Your competition may not reacrt as quickly asyou did, which is greayt news for you. Chances are their lack of planniny is putting the company in atightg spot. Their senior management is more concernef about making payroll than making Their foot soldiers are more worriexd about whether or not they are going to have jobs than whethetr their customers are as happy as theycan be. And that'es where you swoop right in.
There is neverr a more cost effective time to attacjk the competition and take over their customers than in a down The cost of advertising plummets as the competitionhpulls back. The challenge of getting media attention dwindlesx as fewer companies are vyinygfor attention. And the cost of wooing customers drops as sales representatives go into adefensive tailspin. In some casees you may not even have to attacktheif customers. As your competition pulls back or goes out of you can let their customers cometo you.
Try that in a bull