News Columns & Blogs

Don’t just survive the economic crisis, profit from it

Economist Paul Romer once said, “A crisis is a terrible thing to waste.” To me, this is such an important statement as we navigate the economic recession that we are in. Rather than saying, “We just have to survive this recession,” we need to say, “What can we do to make our company better to exist and grow in the future?”

Going through a deep recession allows us to make the necessary changes in our business that we could not have done before. One firm used this economic crisis to eliminate all smoking on its property. Another firm that we are working with has let go 10 percent of its workforce, not because they had no work, but because they used the recession to improve the level of the entire workforce.

IKEA provides one of the best examples of dealing with crises that I know. The company started out as a mail-order firm, but built its first brick and mortar store when competition became tough in the mail-order furniture business. Then a fire came along, and they had to build bigger and more profitable stores.

Next, IKEA had a supplier boycott so they responded by designing and manufacturing their own furniture. Finally, they had to deal with their inability to staff their stores with a trained sales force. In answer to this crisis, they developed the self-service portion of their stores with huge success. Obviously, IKEA has used each of its crises as valuable opportunities to reshape itself in an improved model.

There are many areas of your business that you can review now in order to ensure that you are set for the future. Obviously, the first is to ask yourself if you have the right staff in each of your critical positions. Sometimes it helps to seek advice here as most entrepreneurs have a hard time seeing real flaws and limitations in their staff, especially if they have been with them a long time.

You should use times of crisis to evaluate if your business is pursuing enough innovation or new product offerings. Most of your competition is going to be cutting back and now is the perfect time to increase market share and penetrate a much larger market as well.

Another critical area to look into is your use of technology. This is a perfect time to bring new but proven technology into the workplace.