Both the 2008 recession and this pandemic were economic and business destroyers but for quite different reasons. How will those differences impact us going forward?
On September 29, 2008, the Dow Jones dropped 777 points. We were all shocked. Today that kind of drop seems like an everyday occurrence with an equally shocking bounce back within days. In 2008, too many loans fueled the drop. Money dried up in waves as some industries were hit harder than others. Car companies had their hands out for bailouts in 2008. Today they are manufacturing ventilators. Many businesses have adapted in varying degrees to today’s health care needs. Chemical companies are making more sanitizing products, for example. Yet, many have no good alternatives right now.
We have been asking our clients recently how they are doing. Much to our surprise, some that we thought were suffering, were not. Conversely, others we thought would be doing okay are struggling. The PPP life preserver is helping many small businesses, but for how long?
In the years following 2008 our extensive double-blind research of hundreds of companies’ customers showed a trend: In 2008 to 2010 the top-rated buying criteria was financial stability—”Let me know you can fill my order if you take my money.
Then for the next couple of years as inventories and manpower got depleted, on time delivery suffered and consequently rated high in research surveys. While companies scrambled to fix delivery, then came quality issues. Following the 2008 recession, these were top trending priorities for buyers.
This is where the battle to improve faster than the competition took hold. For those looking for an advantage to gain new market share, they worked extra hard at the specific things needed by their customers. In 2008, after proving financial stability, it was “get me my order quickly.” Our recent research studies frequently indicate that customers in the past few years, regardless of industry, want their orders filled, and/or needs met, faster and more conveniently. Today it is “get me my order quickly and without any snags.” This means accurately, error free, and damage free.
Then came the pandemic.
Today, like 2008, some businesses may have low inventory as trade is at a standstill. Or, unlike 2008 some have too much inventory as it sits in the warehouse with no orders. Many have let go of staff as revenue streams dried up. However, today’s technology advancements, (robots running the plant, quantum computing), and personnel availability (millions of employees waiting to be hired or rehired– In 2008 unemployment hit 10%. Today it is at 15%). This will allow many companies a much bigger and faster bounce back, especially for those who preserved cash early on. There is also money, lots of it, looking for places to invest in companies that show resilience.
One thing to do now is to assess how your customers are impacted. Some will be in better positions than others. Learn who is doing well or are struggling and find out why. Do not make assumptions about their industry or their geography.
To illustrate, some builders in the northeast are at a standstill. In Florida, commercial construction has slowed, but houses are going up so fast it is a blur. Florida builders are taking advantage of the suddenly available labor pool and putting up houses on lots not yet sold, just to get ahead of the curve. So, for suppliers to builders, check out the specifics, there is plenty of demand in some pockets.
Also, think about what you offer and how it fits into your customers’ recovery and growth. What can you do now to ensure they remain both healthy, and a customer of yours?
While some companies are limping along today, with some solid discipline and hard work, many will be running strong again. Also, there will be consolidation of many industries providing added market share opportunities. For companies who are not struggling, can you take a giant leap forward to garner new market share by focusing on two things: faster delivery/service without customer complaints/errors?
Like 2008 it may be necessary for you to prove you are financially stable as well.
Remember 2008 came and went and we prospered after that recession. We, as a country, will prosper again. The American work ethic is what always gets us through. It will again. Focus on one or two things your customer demands and deliver them with a vengeance and you will gain competitive advantage.