If…
…If you can talk with crowds and keep your virtue,
Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it…
– Rudyard Kipling – “If”
Keeping your head. If it was hard earlier, it’s even harder now. We know it. You know it.
The ones who don’t, think their rising revenue and improving employee sentiment are permanent changes. They are not. The “Golden Zone” is when revenue hasn’t started falling but costs appear to be starting to slow. Small business are often most optimistic at this point…the end of an economic cycle.
These are two dynamics that appear in the “golden zone” for a very short time at the end of an economy’s period of growth.
We have spoken to many companies who don’t fully realize that revenue is rising from higher prices and not from increasing units sold(which are likely to begin falling in 2023/Q1). If you have a fixed-cost service business – which many businesses are – get the same or more money for less work sounds great.
Actual units sold are often falling. Remember, volume changes always lead changes in prices.
If your cost structures have changed, either because you’ve had to automat more or you can’t afford to hire more, you’ve adapted to the post-COVID world. Employee costs have been addressed. Other companies will see inflation create employee pressures for higher wages or unionization demands become even more apparent. However, this also means your profit trends are now mostly as a result of revenue changes.
If this is the environment…how can anyone keep their head? Adapt your thinking!
The way our friend, Jeffery Rollert, looks at the world is that everyone has an infinite amount of “futures.” Each decision we make focuses us on fewer specific futures…until there is just one. By thinking of “many” futures instead of “the” future you can see opportunities better.
Competitors approach client problems differently, because if they did not they would have to compete only on their price. That’s a horrible business model. Being the lowest price makes you a commodity; it also slowly destroys your brand. Rollert suggests focusing on competitors which see a different future (often because they serve a differently characterized need). Getting two futures together can bring size and more stability to the combined businesses. The combined size can help them survive, as often the company with the largest marketing spending wins more often.
Which of your competitors has the employees, the techniques, the clients, that bring a different future? What one do they have, and which one do you not? Maybe your company focuses on West Coast clients. Are there any similar to your that focus more on the East Coast?
Business Development Representatives (BDR’s or Salespeople) we speak with tell us there is a lot of indecisiveness by prospects. The BDR’s are resorting to massively increasing the number of calls they make in a day. That means shorter calls or relationship lives with clients. This makes the customer experience less attractive to the client. Reps take longer to return calls and are often not completely prepared when they do.
Increasing the volume of calls is not a good way to respond.
DC uses a “prefer four quarters over 100 pennies” strategy of focusing only on a few clients during the customer engagement. These discussions focus more on not “Can we do this?” versus “How, can we do this?”
They come to us for “the how.”
Many of our customers have taken our advice to heart and are examining every competitor they have to see if a profitable acquisition can be made. The want to be ready (and pre-funded) the moment the other company is ready. They all want to be ready before the client is, with answers to questions and financing arranged in advance.
A business owner who is indecisive now is likely to make a rash judgement on selling in the next 12 months. We believe valuations and total sales proceeds, will be lower in Q1/2023.
Be like the fox hunter. Have the hounds* drive the fox to you. Don’t run around chasing foxes.
The foxes will be gone by then, already taken by other hunters.
If…you prepare yourself to walk with Kings.
* ”Hounds” is used metaphorically. They are people who are highly social and spread the word that you are interested in doing Joint Venturess or being acquired (whole or in part).
Climb the Wall of Fear
Education is the enemy of fear. Let us know if we may educate you and your staff in a Zoom meeting, with suggestions on who to approach and how to finance it. You can use our ideas to get conversations going. Our pre-qualification process can help you know how much to bid and get you to where you need to be with the acquisition…much faster. Click here to learn more
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