Survival of the Fittest, Part One
How Economic Cycles Clear the Playing Field of the Weakest Companies
I’ve been reading about past recessions and cycles in the US to get some perspective on how our current economic statistics are like other historical periods. Did you know that the U.S. has gone through 34 recessions since 1857? Prior to the 2020 recession (which lasted only two months – from February of 2020 to April of 2020) the U. S. economy experienced the longest economic expansion in recent history. 128 months! Overall, in the 20th and 21st centuries, economic expansions lasted longer, and recessions were shorter. The average expansion lasted 48 months and the average length of a recession in the 20th and 21st centuries is 14 months.
The last official downturn in the economy occurred in 2009 because of the financial crisis and many small business owners may not have been in business at that time. That financial crisis caused credit access to shrink while consumers reduced spending at the same time, waiting for the cycle to change. The companies that survived were in position to achieve growth during the recovery cycle.
“…. Even a turkey can fly in a hurricane….” Brian Buffino
In a recent podcast by Brian Buffino (real estate industry business coach) he described the frenzy in the real estate market in most of the country for the past few years. With the huge demand for housing and such a limited inventory, many new agents entered the market. They hit the ground running with buyers eager to find housing and to act quickly. If those agents have not spent the time building solid sales skills and relationships needed for long-term success in real estate, they may find themselves leaving the business as soon as the excess supply of qualified buyers shrinks.
Those left standing after the frenzy entrants are gone will have
- the best levels of service and professionalism
- who have been building referral networks for years
- and investing in people, systems, and their customers
They still here are committed to the business for the long run. Those survivors have had to make compromises between growth and profitability to stay in business, between laying off experienced staff members and holding on to them during the down cycles and making sales today versus building relationships that will pay off for years to come.
These dynamics are similar in the landscaping business, construction business and other service industries where demand has been great for the past few years. People complain that they can’t get a project they want started for 6 months and they are willing to pay deposits to hold those slots. If there is a downturn in demand in the landscaping industry due to the inflation or even a recession, it will be those companies who knew how to sell before the frenzy, who have been doing quality work and have a reputation for professionalism, quality and reliability that will be standing after any “easy money” landscapers are long gone.
If you’d like to discuss how to optimize your company’s positioning and strengths through an economic downturn considering your goals for a graceful exit, feel free to give us a call. There are buyers in the market now and there will be buyers in the years to come as we live through these repetitive cycles.
You can reach me via email: [email protected] or on my cell phone a: 224-688-8838.
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