Baltimore Business Journal: Starting a Business : Business Advice

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In order to understand why a down market creates so many opportunitiess for astartup company, you first need to understansd why a bull market makeds it so difficult to succeed. In a bull market, the cost of everythintg skyrockets. As more capital becomes available, so does more New startups springup everywhere, competin g for talent, marketing opportunities and customers. At one time you were the only game intown - now you'v got three guys pretendingv to do exactly what you do - all the whilwe increasing the cost of running your business. Conversely, a bear market drives the cost ofeverythin downward.
Companies go into a losing sight of their growth goalss and in some cases falling into bankruptcy The sudden drop in demand forces the prices of everythinfgsharply downward, creating a perfectg storm for a well-prepared company to creatre unprecedented gains. Before you get your offense you need to get your defens lined up and that means getting very lean very The problem with coming off of a bull market isthat we're not used to pulling We're used to knowing that the next year will be even biggerr than the last, so we plan and spend This time around, we'vr got to create a very different plan.
This plan is aboutg reducing staff, marketing and all possible operatingy costs you have before circumstances force such move supon you. Make no this is going to suck. Nobody is ever excited about downshifting, especially after a good run, but it's bettedr than sending the entire company home becauseyou weren' t ready to make changes. A healthyt approach is to plan for a very long Assume you'll lose more sales than you can possibly Think of your businesx in terms of what it is your company can operate on and still keep the lights on. You can always add more resourcesa if you needthem later, but you won'tt be able to make up for overshootinh your income forecasts.
Kicking butt in a down market isn't just about crawling up in a hole and waitin gfor spring. It's about gettiny lean so you can get focused onhuntinv again. Your competition may not react as quickly asyou did, whicbh is great news for you. Chances are their lack of planningy is putting the company in a tight Their senior management is more concernerd about making payroll thanmaking acquisitions. Their foot soldiers are more worried about whether or not they are goingy to have jobs than whether theid customers are as happy as theycan be. And that's wherwe you swoop right in.
Therr is never a more cost effectivr time to attack the competition and take over their customerzs than in adown market. The cost of advertising plummets as the competitionpulls back. The challenge of getting mediz attention dwindles as fewer companies are vying for And the cost of wooing customers drops as saless representatives go into adefensive tailspin. In some caseds you may not even have to attactheir customers. As your competition pullse back or goes outof business, you can let theirt customers come to you.
Try that in a bull