Businesses Missing Opportunities in This Economy

This economy gets blamed for everything. Granted, it IS causing plenty of problems for a lot of people. But that’s no reason to let other issues needlessly drain the profitability of your business. Let me explain what I mean.

After looking at dozens of businesses and talking with their owners, I saw a particular “economic” situation far too frequently. These businesses were struggling with reduced profits, or in some cases serious losses, due in part to a steep decline in sales. In every case, the owners told me this decline in sales was due to the economy. That’s where they’re missing the boat. What’s more, it’s the unspoken implications of this statement that make it so dangerous.

Let me ask you this. If your business has, say, a 3% market share in your region, and you maintain that same market share while the overall economy declines, then you would expect your business to decline, right? If the economy in your region, and in your industry, declined by 22%, and you maintained the same 3% market share, then I would expect your business to decline by 22%. And if the business in this example did decline by 22%, then it’s fair to say that is due to the economy. It’s fair, but still dangerous. More on that in a minute.

So what if your business, in this example, declined by 48%? It’s very simple. If the sector of the economy that your business serves declined by 22%, and your sales declined by 48%, then you did not maintain your market share. That means that more consumers are choosing to buy from your competitors instead of buying from you. You lost more business than the overall economic decline, while at least some of your competitors lost less. As the economy got worse, they offset all, or at least some of their losses by increasing their market share, and they accomplished that by taking it away from you.

That’s why blaming the economy is so dangerous. “It’s the economy” means that this situation is not your fault, and implies that there is nothing you can do about it. It’s a great excuse, but oftentimes hides the real problem – your declining market share. Your 48% lost sales breaks down to 22% due to the shrinking economy, and 26% due to lost market share. Lost market share is always a competition problem, not an “economy” problem. And you can ALWAYS do something about a competition problem.

So what can you do about it?

• First of all, stick to the facts. If you don’t know what your market share is, and you don’t have any facts about the economy in your industry for your business’ region, then admit that you have no clue regarding how much the recession is actually affecting your business.

• Recognize that some things, like the economy, are not under your control, and stop worrying about them.

• Recognize all of the things in your business that are within your control. Take some time out, and brainstorm a list. Write them down. What is under your control, or at least subject to your influence? Your attitude. Your work ethic. Your marketing message. Your position in the marketplace. Your branding. Your market share. Your product line. Your diversity. (You can take it from here, right?)

• Take an honest look at why you’re losing market share, and fix it. If you can’t be competitive, in any economy, then you won’t be in business for long.

• Being competitive doesn’t mean simply lowering prices, although that may be a part of your strategy. Don’t forget about lowering costs, renegotiating or partnering with suppliers, adding value, diversifying, etc. You still need to make a profit.

• Recognize that there is always opportunity in the marketplace. It might not be the same opportunity you’re used to serving, but its still opportunity. There were more millionaires created during the great depression in the US than during any other 12 year period in our history. Your job is to be open to it.