As entrepreneurs everywhere were hustling and hacking on their projects this week, many were rudely awakened by a text message, a news report, or a frantic friend: driven by China's economic turbulence, the global market plummeted 1,000 points in a single day. For entrepreneurs totally invested in their companies, this may not mean much - for such a downturn means bad news for the market, and potentially for your total available customers. The markets continue to brace themselves for what will come next, as China continues to teeter on the brink, oil futures appear volatile, and the US Fed remain indecisive about its short term strategy.
For entrepreneurs, this is a good time to check in with the status of your business and see how sound the foundation of your own financial house is. Are you on target with your business goals? How do economic conditions impact your business? How profitable is your business? A business that is never evaluated will never be elevated. The best approach is not just to set short-term goals, but to think beyond profits to asses your long-term impact, as well as the strategies that will take you there.
Focus on Differentiation in a Messy, Noisy Market
Chaos creates noise, and may make it more challenging to reach your customers. While many entrepreneurs are spending time duplicating the efforts of others in an attempt to reach quick profitability, undifferentiated, substitutable products are the first to go when budgets tighten. Use the downturn to look at competition, and seeing where the market chaos is leaving weaknesses you can capitalize on. As Huffington Post suggest, think like a startup: create customer profiles of the market you intend to serve, anticipate their needs, and continue building the things that will set you apart.
Fix the Leaks Before Adding More Water
A down market can be a challenging environment for creating more revenues, but it's a great time to understand and reduce your expenses. This is your chance to fix the leaks in your projects before the revenues start rushing back in. Inc. Magazine reports that most companies leak money in at least six places, like bank charges and web hosting. While six may be extreme for your business, it's almost a guarantee that there's room for improvement.
Another example of wasted revenues: subscriptions. Consider the tools you're using for your business - from Salesforce to Spotify - and understand where you're being excessive and wasteful. More urgently, what types of subscriptions are you part of that you're currently not even using? From magazines to professional organization dues to meal deliveries, if you're paying for goods and services that aren't seeing use, you're throwing money overboard.
See the New Opportunities and Challenges of the Downturn
While the new economy presents many opportunities, it also presents a number of challenges for entrepreneurs. Hiring downsized talent, getting a cheaper rate on office space, negotiating with your suppliers, and avenues for partnering with struggling businesses that can offer you a lot of value and benefit from your stability are all opportunities part of a down market. At the same time, the downturn may wipe out your key client, bankrupt a key supplier or service provide, or create unexpected expenses. Keep especially aware during this time.
Many entrepreneurs fail in business because they don’t know how to bridge the gaps - that is, staying competitive in any business cycle. The economy has not been the same since 2008, and many of the strategies of the past will not work in this new economy. As always, keep consuming books, audio programs, mentorship, market research and above all, conversations with your customers. Relevance is revenue and it is vital to your success in the new economy.