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Swimming Naked

Being Unprepared in a Tough Market Can Catch You with Your Pants Down

Warren Buffett once said, “You don’t know who’s swimming naked until the tide goes out.” So picture this:  Everyone’s having a good time swimming at the beach. They’re all up to their necks in water and only their heads are exposed. Suddenly, the tide starts going out and exposes everybody down to their knees. No one is exempt. The tide affects everyone. If you just happen to be skinny dipping, then you’re exposed. No help. No exceptions. No mercy. You are stuck. Of course you can go into deeper waters, but that’ll just increase your risk of drowning because now you’re that much further from the shore and safety. This is not a good situation to be in. Did you plan well? Of course not. Do you have a lot of options? Of course not. Are you in trouble? Of course you are.

Now substitute the water with your business, industry and marketplace. And substitute the tide with market conditions. Market conditions could be the economy, the price of gas, our nation’s war, the housing market, competitive pressures, international situations and more. When these conditions hit, they take no prisoners. There’s no mercy. Everyone gets affected. Just look at the affect the recent housing market had on all sorts of businesses. It did not just affect the real estate industry and housing contractors, but it had a ripple affect on dozens, if not hundreds, of other businesses that fed off of the housing industry.

For instance, I know of a small local cookie company that was devastated by the downturn in the housing market because a very large part of their business was providing gift baskets filled with their cookies to home builders, mortgage companies and Realtors for new homeowners. Fewer homeowners meant fewer closings, and fewer closings meant fewer gift baskets. Use your imagination and I’m sure you can think of quite a few businesses that were affected by just this one change in the market. The tide went out on these businesses and they were caught with their pants down.

Not long ago the town of High Point, North Carolina, was known as the furniture manufacturing capital of the world. Over the past several years the Asian market has become an economic alternative to furniture manufacturing due to its cheap labor. As a result, most of the manufacturing plants in High Point have now become giant warehouses because those businesses have changed from furniture manufacturers to furniture distributors. Additionally, the companies that manufacture the wood working equipment (saws, sanders, lathes, etc.) to make that furniture have been equally impacted by this change in the industry. The ripple effect is enormous. Whether you make cookies or furniture or furniture manufacturing machines, you must be prepared to adjust to the changing tides of the market, your industry, your competitors and the world at large. When their tides go out, you could be stuck swimming naked.

This is not always an easy task since many changes don’t announce themselves or are difficult to recognize until it’s too late. The best bet is to be prepared for the worse. First, don’t put all your eggs in one basket. If you develop a product or service predominantly for one industry, or only sell into a specific vertical market, imagine that industry getting impacted by a negative downturn. Then imagine what would happen to your business or sales as a result of this downturn. If a change would have a big impact on your business or revenue, then begin planning to divest into other areas if for no other reason than to use as a fallback position – a Plan B.

If you sell into a vertical market, you undoubtedly had to learn a lot about that market in order to be successful. Pick other closely related industries and start learning about them as well. Then begin selling a little into those industries to start spreading your exposure across multiple markets to prepare for potential future changes. The companies I mentioned earlier that manufactured the furniture making equipment re-focused on manufacturing machines that make kitchen cabinets and finishing molding for homes. When the furniture market died out for them, all they needed to do was ramp up what they were already doing. They were prepared to recover. Then later, when the housing market took a downturn, which had an impact on the kitchens (fewer homes meant fewer new kitchens) they had machines that made cabinets for the home renovation market, which is huge. They just kept evolving and haven’t yet been caught swimming naked.

What the cookie company could have done was to divest into other markets that could use gift baskets as well. In a town like Las Vegas there’s a small, almost unheard of industry called casino gaming. Seriously, the casinos cater to high rollers, and even medium rollers, and they do whatever they can to cater to their every need. Perhaps while business was doing so well with the new homeowners prior to the housing market bust, they could have started penetrating the casinos with offers of gift baskets for their preferred guests.

You should always keep a close eye on the markets and industries you sell into. Study up on them. Subscribe to magazines and newsletters specific to them. Stay close to your customers (which you should be doing anyway as part of your customer retention strategy), and learn from them what’s happening in their vertical markets. Attend industry specific trade shows and conferences to learn what’s upcoming and hot.

The bottom line is all about being prepared. Don’t get complacent. Keep your head up and your eyes open. Look for signals. Don’t get paranoid, but analyze the signs and signals you may be picking up on. Use your talents and skills to expand your knowledge and exposure so you’re not caught off guard. And most of all, wear a swimsuit so when the tide goes out you’re not caught swimming naked.

Good luck and good selling!

About the author:
Russ Lombardo, President & Founder of PEAK Sales Consulting, is a nationally recognized Sales and CRM consultant, speaker, trainer, and author. Russ works with sales organizations and management who want to increase their sales results by acquiring new customers and retaining existing ones. As a speaker, Russ presents sales training seminars and customer retention workshops as well as keynote and conference speeches to dozens of audiences every year. He is the author of five books on Sales and CRM.


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