Memphis Business Journal: Starting a Business : Business Advice

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In order to understand why a down market creates so many opportunitiee for astartup company, you first need to understand why a bull market makeds it so difficult to succeed. In a bull the cost of everything As more capitalbecomes available, so does more New startups spring up everywhere, competinv for talent, marketing opportunities and customers. At one time you were the only game intown - now you'vd got three guys pretending to do exactly what you do - all the whilew increasing the cost of running your business. a bear market drives the cost ofeverythint downward.
Companies go into a losing sight of their growtj goals and in some cases falling into bankruptcy The sudden drop in demand forcesx the prices of everythingsharply downward, creating a perfectg storm for a well-prepared company to createw unprecedented gains. Before you get your offense you need to get your defenss lined up and that means gettiny very leanvery quickly. The problem with coming off of a bull markety isthat we're not used to pullingg back. We're used to knowing that the next year will be even biggerf thanthe last, so we plan and spene accordingly. This time we've got to create a very differengt plan.
This plan is about reducing marketing and all possible operating costs you have before circumstancess force such movesupon you. Make no mistake, this is going to Nobody is ever excitedxabout downshifting, especially after a good run, but it's better than sending the entire company home becausee you weren't ready to make A healthy approach is to plan for a very long Assume you'll lose more sales than you can possiblyt forecast. Think of your businessa in terms of what it is your company can operate on and still keep thelightx on. You can always add more resources if you need them butyou won't be able to make up for overshootinyg your income forecasts.
Kicking butt in a down markety isn't just about crawling up in a hole and waitingbfor spring. It's about gettin lean so you can get focused onhuntinh again. Your competition may not react as quicklyy asyou did, which is great news for you. Chances are their lack of planninbg is putting the company in atight spot. Theid senior management is more concerneds about making payroll thanmaking acquisitions. Thei r foot soldiers are more worried abouf whether or not they are going to have jobs than whether theit customers are as happy as theycan be. And that's where you swoop right in.
Therd is never a more cost effectivwe time to attack the competition and take over theier customers than in a down The cost of advertising plummets as the competitionpullw back. The challenge of getting mediq attention dwindles as fewer companiesx are vyingfor attention. And the cost of wooingf customers drops as sales representativeds go into adefensive tailspin. In some casew you may not even have to attackthei customers. As your competition pulls back or goes out of you can let their customers cometo you.
Try that in a bull