As many of you know, I’ve been doing a fair amount of research into the past 12 US recession going back 136 years–looking for what separated the winners from the losers.
One of the big secrets from this research is how winning companies profit from new trends that emerge in a recession.
The companies that grow in a recession RIDE a prevailing trend in their marketplace. The companies that lose are the ones that aren’t riding a trend, but being ridden by a trend.
Let me explain and you’ll see how profound this secret really is.
I recently met the owner of a sign company in Plano, TX. When a new retail store opens in his marketplace, his business manufactures, installs, and maintains the sign that goes above the store.
As you might suspect, the number of new retail stores opening has gone way down. Now, you would think this would be a problem for his business–and it has.
But, this very clever entrepreneur accidentally stumbled across two new opportunities that did not exist in the boom years. He has aggressively gone after these two new opportunities as a way to offset the lack of new retail stores opening.
What are these two opportunities?
1) He is doing a brisk business in selling “Going Out of Business Sale” signs. Brilliant!
Yup, if the trend is stores going out of business (instead of opening for business), you might as well RIDE THE TREND and help customers go out of business more profitably. The business coach in me finds this to be VERY clever.
2) The second opportunity occurs after a store has gone out of business. The landlord wants to get the space filled quickly, but the space looks like it’s still being occupied by the last tenant (who is now out of business). So this entrepreneur is doing a brisk business in “sign removal” services.
He’s already got the staff to do this, the worker’s comp insurance, the trucks, and the ladders.
This guy is profiting from this trend–while his competitors sit their and complain about it.
Listen.
Entrepreneurship is about solving problems for customers.
In a recession, there are simply no shortage of problems. What gets most people tripped up is that the type of problems and the priority placed on those problems has changed. In other words, the trend has CHANGED.
What customers care about most 2 years ago is not what they care about now. Most entrepreneurs recognize the first part of this phenomenon (e.g., customers no longer care about X).
What they don’t realize is that when a customer cares less about X (e.g. your product or service that is no longer selling so well), they replace that by now caring about Y (something different).
The secret to making wild profits in this economy is to be able to figure out what “Y” is for your customers and give it to them.
This is just one of the many lessons in my book The Recession-Proof Business. If you haven’t gotten a copy yet, you can get it for FREE at www.bailoutusa.com.