3 Ways a Bad Economy is Good for Business
Leaders in big organizations could learn a lot by observing how small businesses handle tough times. As BNET blogger Alain Sherter notes, small businesses are immensely resilient. In fact, for many entrepreneurs, an economic downturn can be a gift.
Skeptical?
Here are three reasons a bad economy can be good for business:
1. Great Talent Becomes Available and Affordable
Due to the usual round of corporate layoffs, many seasoned executives have been laid off. And some received hefty farewell payoffs, meaning they may invest in a new business or be prepared to work for a lot less than their accustomed salaries. In downturns, you can find more talent for less. Even now, as the economy starts to recover, this may still be true, as employee morale stands at an all time low.
2. Bored Consumers are Ready to Try Something New
In a downturn, many big companies cut costs and stop innovating. But stores want new exciting products to lure in customers. When Eric Ryan and Adam Lowry founded Method in 2001, that's what they found. Realizing that everyone was spending more time and money on their homes, but puzzled that those same homes were cleaned with products that were ugly, stank and wrecked the planet, they determined to generate a line of products that were gorgeous, fragrant and green. Independent stores were happy to let them try out their new line and Target soon followed. Every time the giants beat a retreat, there's a chance for the little company that can.
3. Some Great Partners Also Are Available
Key to Method's positioning and success was the design of their product containers. They knew that most materials used to clean homes were so ugly that they had to be hidden away under the sink. Why not, they thought, make something beautiful that people would want to leave out and visible? So they approached world-class industrial designer, Karim Rashid who designed some of their first products. His clients range from Dirt Devil to Prada. What that means is that, in normal economic circumstances, Rashid says he wouldn't even have answered an email from an unknown.
Not only was Rashid willing to work with an unproven company; manufacturers had spare capacity that, in boom times, they would not have had. That meant Lowry and Ryan could live up to their dream, of manufacturing gorgeous containers for their fragrant, green products.
Of course if the economy really is recovering, leaders may need to get their skates on. With any luck, it will be awhile before the economy is so bad that it provides such a great head start.
Have you found that the bad economy can be good for your business? How?
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