This rings true even in recessions.  That’s where the old adage ‘cash is king’ in a recessionary market comes from.  Many companies saw the recession coming and moved into cash.  They were waiting for deals. They’ve been waiting for the market to turn. They’re also waiting to buy from you. Sell to them. They’ve got money – some of it could be yours.

So, how do you get some of that money? A story first…

Years ago, one of my sales teams was working with a large client called Public Storage.  We were doing about $180,000 a year in business with them.  When we asked them how much total spending they did with us and competitors of ours, they said they’d have to check.  The following week they came back and said overall, company wide, they spent about two million dollars.  Wow–and we were only getting nine percent of that! Imagine how the conversation changed at that point to, “How can we get more of your business? What do you need to see from us to spend fifty percent of that figure with us?” We knew they had the money because they told us they were spending it! Now we just needed to work closely with them to have them spend it with us instead of our competitors.

Figure out which of your clients or prospects are doing well. Do your research and really focus on them, and you’ll land them without any problem.  Ask your clients how much of their current business you are currently getting.  Spending time with your top clients to increase revenues is easier than finding new ones.  They’ve got money – some of it could be yours.

Any stories to share ?

You’ve already got lots of products or services, so why not re-brand them or re-market them? For example, I sell leadership DVDs that are used by CEOs and their employees around the world. Once I started selling them as a package of four, DVD sales really took off. ‘The BackPocket Packet’ comprises ninety percent of the orders fulfilled from my website today.  And hundreds of companies use them to train their employees now.

Another area to find cash under your company’s ‘pillow’ is by considering selling off a small equity position in your company.  You’ll be able to realize some cash for what you’ve built already, and you could have a major opportunity if you sell a small position to either a current or large supplier, or customer.  If they own 5% of you, you’ll get 100% of their business, too.

And while we’re on the subject. Check out this hilarious spoof headline from The Onion. Beware!

Look for all areas you can cut expenses, except advertising and marketing (if you cut those, you will not only see a slowdown, you’ll be causing it).  Really look for waste in your company and start cutting it fast anywhere you can. Cut the people you’ve been wanting to fire but didn’t have the guts to as well.  Hire salespeople for sure, but cut all the rest of the “dead weight employees,” too.

Increase credit lines at your bank and with credit card companies now, and every six months for as long as you’re in business.  Credit card companies will increase your lines every six months just by you calling them. Also, stop buying stuff.  Really.  Put a freeze on virtually all the spending you can.  You’ll be amazed at how much money you free up just by saying no to virtually all potential expenses.  Tighten the belt fast.

Collect from customers faster than you used to.  Collect COD as much as possible.  Get customers to pre-pay.  Increasing your cash flow at times is as good or better than cutting expenses.

This last point will help increase your cash flow as well, but you have to be gentle and selective in doing it. Pay your bills slower than you used to as well.  Delay paying receivables as long as you can.  Even just waiting until the last few days allowed will make a big difference for you.

pic Dynasty Financial Services

While all of your competitors complain about the economy, and spend their time reading every article that confirms their fears, go in the opposite direction.

When companies start laying people off, the great employees fear for their jobs. If you’re hiring salespeople when everyone is laying them off, the positive buzz that you’re still hiring will start to spread – even to customers.

What’s even better? Imagine if you hired one of your competitor’s best salespeople–what would happen then? It would impact both of your companies in precisely the way you want to in a competitive world.

I know it seems odd that while in the middle of a recession you’d want to hire more people, but the people you are hiring are the rainmakers.  You’re hiring people to increase sales, add money to your gross margin, and increase buzz about your company and brands.

pic Search Engine Genie

While everyone else is recession minded and shutting down production, you’re going to be planting the seeds for growth.

I was working with a client in Berlin who mentioned that they just landed a TV advertising deal where they don’t pay any fixed advertising fees. Instead, they negotiated a revenue-share deal with the TV station where they make a bit of money off of each new client their TV ads generate.

Remember, advertising outlets like TV, radio, magazines, newspapers and websites have no hard costs to run your ad.  For TV and radio, it’s airtime.  For magazines and newspapers, it’s a piece of paper they have to print anyway (one piece of paper in a magazine ends up being four full page ads and a staple in the middle).  Often, and especially now, magazines will run ads for free or very cheap if they are going to print the next day. Any unsold ad space in newspapers can never be re-sold.  Once Tuesday’s issue goes to print, it’s over for that specific window of sales potential.  It’s not as if it were a bottle of wine they are selling, which if not sold today, they can always sell tomorrow.

All media outlets have expiring inventory and they will sell their space for whatever they can negotiate as a price for at that time.

Years ago, I ran a very large barter company and we had tons of clients in advertising.  They would all trade advertising space for products from other companies.  All those ads you see in magazines for golf courses and hotels were not paid for with cash.  They were all paid for by the golf course trading twenty, fifty, or one hundred green fees in exchange for the ad. What about the hotel advertised on page 2? About ten to twenty nights in a hotel room for the ad.  It doesn’t cost a golf course anything to trade green fees except the cost of a scorecard and pencil–the golf course and hotel room will still be there the next day to re-sell to someone paying cash.  If you can trade your products or services with the media, they’ll turn around and re-sell it for cash to their clients later, too.

Don’t be afraid to negotiate the price, too; all advertising gets cheaper the closer it is to the date or time the ad will run, as I mentioned earlier.  I’ve negotiated millions of dollars of radio and TV ads, which were “pre-emptable.” We got them for fifty percent off, but if someone else came along willing to pay full price they’d cancel our ads. “Great,” I’d say. “I’m building a brand for years to come – I’ll take as many 50% off ads as I can get.” Someone else can pay full price.

I live by an old adage that always helps me through downturns:
“Early to bed, early to rise. Work like hell and advertise…”

pic Por Homme

Look at this massive BMW ad right over top of an Audi dealership in Hong Kong

During recessions, consumers are extremely cost and service conscious.  Customers will switch from your competitors right now for the smallest discounts or friendly nod in their direction.

You can’t go so far as predatory pricing, but in a slowdown, virtually everyone is looking to save a buck.  So target your competitors’ customers and start offering them what it takes to get them to move to you.

Cable and phone companies do this ALL the time, so don’t think this is something new.

Go ahead – steal them away.

pic Jalopnik

Ray Kroc grew McDonalds from a few locations to the enormously powerful brand we all know and secretly crave.

He had a particularly cut-throat saying about business: “When the competition is drowning, stick a hose in their mouths.”

While that sounds brutal, Kroc understood that in a recession competitors leave themselves vulnerable. He knew that the best time to eliminate your competition is when they’re at their weakest–during an economic downturn.

I once saw a Nike t-shirt that said, “Somewhere, right now, someone is practicing.  When they meet you head to head in competition, they’ll beat you.”

As a CEO coach, I see that this seizing on vulnerability is where business is most like sports.  Your competition is naturally your opponent, and when you come to the game unprepared for the challenge, someone will be waiting for you to choke, and when you do, they’ll happily leave you on the sidelines while they advance toward their goal.

Hiring competitors’ salespeople, proactively targeting your competitors’ clients and even re-pricing your products or services to attract those clients will help you and hurt your competitor.  Worry more about yourself, but when the competition is drowning, stick a hose in their mouth.  This is one area I mentor CEOs on when I’m coaching them.

‘Survival of the fittest’ isn’t just for the Serengeti – it is alive and well in your industry too.  Who’ll win?

pic Poliza

STOP IT!

STOP IT!

STOP IT!

Stop complaining and stop making excuses. So what if the economy sucks? Yes, there is/was a recession.  Yes, the housing market plummeted.  I know. I get it. I read more news from multiple outlets than I probably should.

As an entrepreneur and as a business coach, I don’t really care that the economy sucks and neither should you.

I was doing a speaking event recently in San Francisco.  It was a four-hour workshop on how to grow your company and foster an awesome culture.  The group I was presenting to was a large group of entrepreneurs from all over the United States.  Some had sixteen employees, some had one hundred and sixty employees, and a few had a couple thousand employees.   They were all planning on growing roughly 20% in 2009– and we’re in the throes of a recession – but they didn’t care.  Yet they kept talking about the economy in spite of the fact that they all planned to grow their businesses.

Finally, I told them every time I mentioned the word “economy” during the four hour session they were to scream, “STOP IT!” loudly at me.  We practiced a few times, and they were really loud for sure. I never mentioned the word for the rest of the presentation.

Everyone should play this little game with themselves: Every time you hear yourself saying either “economy” or “recession” silently scream, “STOP IT!” to yourself.

The reality is that there is a huge slowdown, and when it runs its course, we’ll all learn that it was worse than anything we’ve gone through since the Great Depression.  However, the smart and focused entrepreneurial companies will work around it will still do well. We may have another recession somewhere down the line, and if we do, there’s no reason to behave any differently than we did during this time.

As an entrepreneur, “the unknown” will always be a part of your life.

“Never miss out on an opportunity like a good recession.” – Jack Welch