Andy Grove, former board chairman of Intel Corp., coined the phrase "key strategic indicators." In today's environment, business needs to recognize "key strategic change indicators." Each day, we hear more bad news about bank failures, bailouts, the threat of double-digit unemployment ... you name it. But how is it that everyone was caught off guard so suddenly? The truth is that signals were evident years ago, but government and industry leaders failed to recognize strategic change indicators or chose to ignore or deny them.
While the major focus from government and business news media has been on the banking and auto manufacturing industries, those in the marine industry and the small-business community continue to be overlooked, despite the fact that the marine industry is responsible for creating jobs and independent business opportunities. The industry has a ripple effect impacting boat manufacturers, dealers, dealer-finance companies, marine services, manufacturers of engines and marine components and vessel safety equipment, marinas, independent pumpout and fuel businesses (not to mention the general petroleum industry). There is also the lodging and food service industry that depends on boaters, as well as the bait-and-tackle shops.
Most of all, let's not forget that which has no price tag: the family unity created by spending time together on the water. To governments, the industry slump represents millions of dollars in lost revenue from income, excise and sales taxes.
But the marine industry and independent small-business community, driven by its entrepreneurial spirit, have survived these challenges in the past and those who embrace change with a vision of opportunity will again survive these challenging economic times. Some will even emerge stronger. Let's take a look at what we need to do during these trying times. No business plans to fail, but many fail to plan - or to plan efficiently. Effective business planning involves:
- Knowing what business you are in, the industry specifics and one's strategic position in that industry.
- A cohesive collaborative effort that takes into account operations, marketing (including public relations), production and finance. Like a table, these four legs support your business. Remove one and the table falls.
- Marketing includes public relations embracing the comfort zone with existing, prospective and suspect customers. PR extends far beyond community relations and charitable giving. It should give the consumer a "warm and fuzzy" feeling, a compelling reason to want to do business with you now and in the future.
- Diversity should be not limited to satisfying government human resource requirements. It should mean thinking "outside the box" to expand market share by creating new markets targeted toward satisfying diverse needs. Avis Rent-a-Car did just this and achieved a significant revenue increase by capturing market share others failed to recognize. After introducing five devices to make its rental cars more accessible to persons with disabilities in 2003, such as a transfer board to allow drivers to move from their wheelchairs into the vehicle, sales to customers with disabilities jumped by 30 percent over two years.
- Experience is our best teacher. Executives who have survived changing business cycles should recognize changes long before they become a problem and seek ways to capitalize on this change. What worked in the past can be adapted to existing market conditions.
- Those who recognized strategic change indicators two years ago were better prepared for success in a down market. Response to change will determine a business' success or failure during the next two to four years. Flexible businesses capable of responding today can be market leaders tomorrow.
- History tends to repeat itself. Failure to learn from the past leads to failure, while those who appreciate lessons learned respond to change and succeed.
- Ask yourself: How does my prospective market respond to adversity? People tend to live for today and look for something that makes them smile or feel good. In the 1970s, sharp businesses capitalized on disco because music and dance provided stress relief and helped people forget their problems. Think of ways your business can launch a product or enhance an existing product or service to make people smile and feel good. Ask yourself: What can I do to make consumers happy and make them identify with my business? Marketing is all about image and perception.
- If you are an entrepreneur looking for a business opportunity, consider that historically during an economic recession people consume more comfort foods like ice cream. They watch more movies and focus on family unity. They hold more barbecues and go fishing together. They want to be entertained but at an affordable cost. With money tight, cars and appliances are repaired and clothing mended instead of replaced. Attitudes change.
- Businesses need to find new ways to network with existing, prospective and suspect customers. While other businesses hunker down and hide, now is your time to embrace change and make yourself part of the community. It is time to become an extrovert while remaining innovative and frugal.
- These days, people are turning to the Internet for both entertainment and value. Your Web site represents the image you want to project, and you only have a short time to captivate visitors before they move on. Your Web designer is a critical part of your public relations campaign, so make sure they fully understand your industry and business and - most important - how you want your company to be viewed. Perception is everything. Use your site not only as a means of telling people about your product but to give them something interesting. Be creative.
- Embrace change. Use your powers of observation to orient yourself toward your desired market position. Constantly look for feedback as to what works and what does not.
- Knowledge is power. Know your industry, understand your potential market, and study your competition. Have businesses failed in a prosperous market because of poor business decisions or waning interest in their product or services? This creates new market potential and the opportunity to end up with a larger slice of a much smaller pie.
- Remember to mind your own business, because no one can do it as well as you can. Constantly observe strategic change indicators, changes in buying habits and consumer behavior. Remember the OODA loop - observe, orient, decide and act - but always remember to evaluate feedback and remain flexible.
While all of the points listed may not apply to every marine company, the concept of maintaining a vigilant watch on changing economic indicators and making timely decisions is paramount to your success, provided you evaluate your progress based on feedback and new information.
Those who remain flexible and constantly modify their business plan based on perceived changes to consumer buying habits can, and will, survive. Those who hunker down and hide will watch as their industry changes and their market share likely erodes.
Andy Powers has devoted his 40-year career to specializing in income taxation, working as a tax specialist with several of the Big 4 CPA firms and as a senior corporate tax executive prior to working as a principal of Powers & Company, providing tax and business management consulting services in Mahopac, N.Y. He can be contacted at www.tax-power.com.
This article originally appeared in the July 2009 issue.