What Business Strategy Wins In This Market?

Constantly, business owners ask what strategy will beat the competition in this downturn. As with all business competitions, the best approach is to attack, now. You see WalMart making a massive move to eliminate all the last of its major competitors. Those who retreat and get back on their heels will not survive the attack from WalMart.

Always gain the offensive. This requires that the approach we recommend to retain capital has been followed. It the drunken sailor approach has been followed recently, you may not have enough funds. Still, attack.

The question is: How can we make long-term commitments and still insulate ourselves from short-term fluctuations in local markets? My answer is that you can’t. If you want to be in a market, you have to stay in it in good times and bad. In more and more markets, the importance of being known, having long-term relationships and being trusted is increasing. Always polish your image.

But you can think about the long and short terms separately. You need two budgets. You need an operating budget, and you need a futures budget. An operating budget is usually hundreds of pages. The futures budget is a few pages. (No, I am not necessarily recommending a 700 page budget, but you can at least see where I was at GM). The futures budget consists of the 8% to 10% of your expenditures that don’t give you anything in return, even if you increase them fast (but that make you lose everything if you cut them). You’d better make clear to your investors what you are doing and insist they have to invest in the long-term approach, now.

What happened in the automobile industry when you had the shift from the traditional passenger car to the sports utilities and pickup trucks? There, you can only move fast and be flexible. Oh, now they have to shift back, huh? How fast they do that will determine their fate.

You need to put 8-10% of your expenses into long range investments that only pay off long term, like customer relations and branding. Know what you stand for and be sure to invest money into the execution of that vision. We cannot invest all our funds in putting out fires. I hope this helps you put your budget in a new light that brings your vision better in focus.

Fundamental business processes win out in any market, particularly this one. So, attack where possible.

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