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Strategies For A Downturn

Today's Wall Street Journal had an article about how businesses can weather and even succeed during a downturn.  If you are blocked from reading the article due to the lack of a subscription, here are the highlights:

First, don't panic.  You can't predict how long or deep a downturn will be.  So, plan for the long term.  Hopefully, your business is not so highly leveraged that you have some economic cushion.  Debt-ridden companies or those that are thinly capitalized are a the most risk.

Seize opportunities while you can.  JP Morgan's purchase of Bear Stearns is a great example.  It looks today that they will have to pay more than they first thought in order to satisfy existing shareholders, but the price will still be pretty cheap.  JP Morgan moved fast to take advantage of a very unique situation.

Look overseas for growth.  If you export, then your US-dollar denominated products should look cheap these days.  And, many international markets will continue to grow even if the US is slow.  Lastly, there are different technology requirements in different markets.  Your product may very well be a better fit in some international markets than it is in the US today.

Keep debt low.  I have always been a believer in this.  I think that businesses that keep their debt level low and manageable have the most flexibility.  Similarly, they will have the cash around to take advantage situations which arise from weaker companies in distress (see Bear Stearns).  These cash-strong businesses can also invest more in new product areas while their weaker competitors can not.

Get your resume on the street.  If you haven't been an active networker, now is the time.  I have met many 40+ and 50+ executives lately who have been in one job for a while and are now looking for their next opportunity.  In some cases, they haven't been actively networking and have to establish relationships from scratch.  That's tough to do, particularly if you want to break into a new market sector, like clean energy.  I always advise people to devote some of their time to networking events in whatever sectors interest them.  You have to make a conscious commitment to this, perhaps attending at least 2-3 events per month.  Find the groups you like that have the most dynamic membership.  Don't fall into the trap of just sitting down for coffee with the same group of 10 or so people every time.  Although that might be enjoyable, if you aren't meeting new people through this effort, it's friendship and not networking. 

I use Outlook to capture my contacts.  Every once in a while, I go through and look at how many new contacts I have added each month.  If I see that the numbers are down, I know that it is time to push myself out into some new networking events.  No one knows everyone!


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