How To Ride the Economic Waves

Can we surf the waves of the current economic storm? A reader sent me an e-mail saying her business has been growing nicely, and wondering whether she can keep it growing in the face of a bear market. I'm going to suggest three ways she can, and hope the community of readers will chime in with other thoughts.

My three thoughts:

1) Try new selling techniques. I'll start with a comment one reader posted earlier: try commission-only sales agents. He felt they were quite effective, and certainly only get paid if they make a sale. Geoffrey James recently put together a 10-step solution to selling in the downturn.
2) Find a patron. Maybe it's the government. Maybe it's somebody else with deep pockets, a smart hedge fund or a large company with good cash flow in a mature market that really needs what you make. But if you can find a deep pocketed client that needs your service or product, you can still grow in a recession. A patronage strategy has worked well for a number of companies I've written about. I'll highlight two recent ones, Vanu Wireless and Sense Networks. Vanu in its early years lived primarily on government grants as it developed software that could simulate different types of wireless communications devices (i.e., radios). This project is of real interest to the armed forces, which have adopted different kinds of radios. But having a patron helped Vanu develop a commercial version of its software, too, and just this year, the company brought its technology to the commercial marketplace.

Sense, meanwhile, is backed by hedge funds, which are interested in whether its software technology can help them get a read on potential market trends in real-time. Such data should help clients make money regardless of the market direction, though it remains to be seen just how well it will do. .

3) Be smart about your customers. Do you know which ones are profitable and which ones aren't? The answers might surprise you. I've talked to companies that were able to use business intelligence software (spreadsheets on steroids) to figure out which customers were its most profitable and which its least. One such firm was shocked to find one of its 10 largest customers was also one it lost money on. It was able to refocus its marketing and sales efforts on more profitable types of customers, and boost sales, too. I know it's a downturn and giving up revenue may sound daft, but what's size without profits?

Knowing which customers are your most profitable and least profitable can also help focus marketing efforts for best results.

I know there will be other good thoughts on how to surf in a storm. Please chime in in comments.