I was chatting with a client yesterday and of course things turned to business. He offered that things were actually starting to “loosen up” for him and that his customers were actually starting to invest again. How that investment is going was of interest. His customers aren’t hiring full time employees. They are investing in productivity and cost reduction projects.
As we furthered the conversation, it seemed that we are actually seeing pretty much the same trends. Business in general (it’s certainly different for each business depending on size, industry, etc.) is sitting on a fair amount of cash that has been accumulating over the last several years. Lack of confidence in the economy means that folks would naturally save in order to be sure survival has maximum opportunity – cash is king! At some point, however, maintenance, improvements, capital equipment, new software and implementing business process improvements can no longer be deferred. What my colleague and I are seeing is that some folks are finally “pulling the trigger” on projects that improve productivity and reduce costs.
There was no discussion that business is picking up for his customer’s customers. That is, demand is not growing (or shrinking for that matter), but is holding steady. Yet to stay competitive, keep a reasonable margin, the whole supply chain is having to reduce costs and one way to do that is investing in infrastructure and improved business processes. Luckily, my colleague is in that very business, so he gains from this slow growing trend of putting in that investment.
Where are consumers in this picture? I think, at scale of an individual, they are doing exactly as small and medium sized business are doing. The consumer is fixing the things in their homes they need to fix. They are repairing cars rather than simply going out to purchase a new one. They are paying down debt. They are investing in a child’s education where they can afford to do so.
Where are you and/or your business in the supply chain? Do you know what your customer’s customer needs? What will you do to be ready if demand for your product or service is going to be at this low level for the foreseeable future? Or, if demand picks up, are your operations ready to handle the load? Did you let too many employees go in order to ramp up? Should you hire full time or part time employees? Are there new opportunities for you to fill a need? Assuming we continue to “bump along the bottom” in economic terms, how will you structure your business to survive and thrive?
Lots of questions and very few answers. But then, that’s part of what leadership is about. Knowing which questions to ask, developing a compelling vision for the future and enrolling others in that vision is what makes you a great leader. So how will you get from where we are right now to developing that new vision? Who will help you develop that vision and who will you enroll? This is definitely the right time to re-invent yourself and your company. It is a matter of survival for some!