Despite the murky economic forecast, this much is clear: Good times will come again, it’s just a matter of when — and how bad things will get in the meantime. While the government contracting community will likely fare much better than other sectors, its fate isn’t foolproof. The trickledown effect from the larger economic climate may spell delays in procurement and increased vendor competition. So, how are you positioning your company to come out ahead? For answers, ExecutiveBiz recently turned to Bo Durickovic, Executive Vice President and Chief of Staff for Serco North America. Here Durickovic offers his thoughts on how best to weather the economic storm — and come out swinging the day the storm breaks:
1.) Get your house in order. “Now more than ever cash is king. Anybody who is looking at their business and saying, ‘How are we going to maximize cash?’ will be rewarded with opportunities to deploy that cash in ways that create significant advantage,” says Durickovic. It’s also the time to reevaluate your portfolio and focus your time and attention on the parts of your business that really matter. Lastly, companies in the industry should acknowledge that there’s no better time to think about upgrading talent. “Companies should especially focus on exceptional talent in other industries who — now more than ever — may be interested in new opportunities,” he adds.
2.) Manage risk, don’t avoid it. You know the score: In good times people tend to be too risk-taking, in bad times they tend to avoid risk at all cost. Now’s the time to embrace a contrarian strategy. “Contrarian strategies have proven to be rewarded time and again by the markets,” says Durickovic. M&A is one example. Numerous studies have shown that companies that thrive in the M&A world usually lagged in periods of growth yet led in periods of recession. If you’re a larger company, keep an eye on small and midsized companies. “A lot of strong small and midsized companies that may not have considered selling before are going to face unprecedented pressures and may well welcome the opportunity to join a larger family to weather this storm,” says Durickovic. Beyond M&A, don’t skimp on other key areas. “If you look at some of the worst recessions — even the Great Depression — the companies that came out stronger were those that prudently continued to invest in R&D, recruiting, and marketing, ” says Durickovic.
3.) Stay close to your customers. Customers’ mindsets mirror that of the market; they become more risk averse in tough times and want to do business with people they trust. Trust is the operative word. “If you don’t have the best relationship with your customers, you are more vulnerable than ever to losing that business to competitors who have stronger relationships with that customer,” says Durickovic. So, “Shore up any weaknesses and ask yourself how can I grow within my current customer base? Make no mistake about it, the war for market share is about to get very intense across the globe.” Not that you shouldn’t continue to look for new markets to penetrate, just don’t make that your number one strategy, says Durickovic. “Your best opportunity is with your existing customers,” he says.