The world is a mess.
A budding trade war between the world’s two super powers, political tension within Europe with a prolonged Brexit process, and between Canada and China with their respective citizen detainees, along with riots and civil unrest in various parts of first world countries has caused markets to respond in shock, sending gold stocks skyrocketing as the market prepare for the worst.
As a business owner, are you prepared to handle the fluctuation in the market that comes with uncertainty times in the economy? How are you observing the market and anticipating shifts to ensure your business survives and comes out ahead of the competition?
The companies who take a proactive stance in planning during this period will undoubtedly have an advantage. So what exactly is it that you are looking for?
HEDGE YOUR BETS
One of the key principles of diversification is not to have all of your eggs in one basket. During a bull market, industries like luxury goods and real estate attract buyers to spend, spend, spend. With a turn in consumer confidence, less people are looking to spend, and are looking for more savvy waves to both invest and save their cash. This could translate into investors leaving more money in their bank accounts, saving in high-interest accounts, buying safe stocks like gold (which has more than doubled in value in the past months), and being overall more conservative in their spending.
So how can you hedge your bets in these challenging times? If you are run a marketing agency specialized in servicing luxury brands, like Catalyst Agents, then perhaps now is the time to consider targeting industries that thrive during economic downturns. This is because industry sectors like real estate and luxury goods thrive during bull markets, but it’s important to realize markets cannot go up forever, so look for ‘evergreen’ industries that are known to be relatively more ‘recession proof’ in tough times.
What kinds of industries would this be?
Movie Theatres - offers a low-priced distraction during tough times.
Cosmetics - people want to look good all the time.
Beer, wine and liquor - studies have shown people drink when away from work during an economic downturn.
Candy - nothing like sweets and sugar to boost a person’s mood.
Thrift stores - second-hand = lower priced = savings
Home health care services - people are still in need of health care regardless of the state of the market, and the boomer market demographic is still growing.
If you are in the service business, you could switch up your client targeting strategy to look into the industries above, but what if you are in a more niche industry selling products to a key industry that you cannot really change? Like selling medical treatment machines to beauty estheticians?
In this case, instead of switching the industries and clientele groups that you target, you need to consider other levers within the business that could make your services and products more attractive to the prospective client.
BEING CONSIDERATE OF YOUR CUSTOMER’S CASH FLOW
Consumers are now spending less on luxury items and seeking out thrifty options, so how should your business respond to these changing needs? You need to take a look at the ‘levers’ in your business - could you be more creative in your payment structure? Instead of requiring clients pay 100 percent up front, could you offer a ‘mortgage payment’ option where they pay for your products over 6 months?
With your product strategy, how about un-bundling products and services so clients can pick and choose a la carte what they want to give them more flexibility? Being conscious of and understanding your customer’s cash flow concerns will definitely help to retain business from your current customers.
Distribution has been on the minds of lots of North American businesses lately because of the tariffs being placed on imported goods from China. This has led businesses to relocate warehouses and manufacturing facilities - does this impact you as well? Could you be sharing manufacturing and/or warehousing space with other companies in your industry also impacted by the current tariff situation? You are unlikely to be the only firm facing these issues, so cost-sharing would be a smart way to go to minimize overhead costs.