The current market outlook makes now the perfect time to think about the future and identify new opportunities for long-term growth. Many analysts are pointing to signs of an impending recession. According to a survey of economists, 34% predict a recession will hit the U.S. in 2021.
Many small companies won’t prepare for a downturn. Instead, they will continue to do what they’ve always done. They forget that the market is cyclical, and they assume that demand for their products and services will always be there.
However, those companies that seek out and act on opportunities when times are good will find it much easier to weather economic storms.
Now is a good time to search out those opportunities.
Nothing stays good forever.
Industry profitability life cycles are much shorter today than they were in the past. It used to be that firms could focus on one industry and never branch out.
Industries today are built out so fast that you could be pursuing something that’s on the backend of its life cycle and not realize it until it’s too late. This is especially true if your business, perhaps an architectural firm, for example, serves a specific geographic area. The Kansas City area has experienced a huge spike in apartment construction over the past five years. The market recently reached a turning point, however, and now there are more apartment complexes than there are buyers. The city is overbuilt.
Let purpose serve as your guide.
There may be hundreds of industries that you could potentially tap into. How do you know which ones are the best fit for your business? Is there one particular industry or customer demographic that you get excited about?
A rule of thumb is to pursue those avenue or sectors that you’re passionate about. For example, one architecture firm that served organizations in six different sectors found it was loved building learning environments. That realization allowed the firm to transition from retail projects, entertainment venues and churches in favor of projects that gave the team a greater sense of purpose and fulfillment.
Let purpose be your guide when times are good. It will help you create a long-term vision that can sustain you when the competitive landscape becomes even more competitive.
To avoid chasing projects in a sector that lacks fulfilling work or profit potential — or one that will soon be oversaturated — always keep one eye focused on the future.
Here are three strategies for doing just that.
1. Research opportunities by sector and come up with a ranking system.
Write down all the industries that your firm or small business could be a fit for. Once you have that list, work with your team to rank how passionate you are – on a scale of 1 to 10 – about each sector.
You also want to rank the level of need for your services within that sector. You can include as many variables as you’d like: how much in-house expertise and experience you have in that space, how much impact projects will have on people, what growth potential you see in the industry, etc. Do this for each industry and then total up the numbers.
It sounds like a simple exercise, but it requires far more analysis than what most firms conduct when pursuing new opportunities. Based on the data I’ve tracked, less than 20% of companies I’ve worked with analyze economic data when it comes to targeting opportunities.
Targeting opportunities is a data-driven decision, though, so you should seek out help if you need it. Most business leaders aren’t economists. I’ve been analyzing industries for two decades, and I still rely on the help of an economist.
Once you understand what industries you should target, focus on potential clients and opportunities that align with your organization’s purpose and vision.
2. Know what needs your company fulfills.
Imagine your company just got really clear on its purpose. For example, we’ve worked with a Missouri-based architecture firm that tries to enhance its clients’ lives by building housing, schools, hospitals and commercial office buildings. It also serves owners who need help navigating all the decisions that come with creating those spaces.
When opportunities appear that allow this company to work toward that vision, it commits to those. Everything else is just noise. The company is successful because it knows exactly what it’s passionate about and what is profitable for it – and the team pursues that work relentlessly.
To gain your own clarity, set an annual goal. Determine what percentage of that goal can be accomplished with existing customers and prospects. If there’s a gap, determine whether it can be filled by taking on projects in industries and geographic markets that you already serve. If not, it’s time to think about entering new industries and new markets. Just remember that it’s a hell of a lot easier to expand a geographic footprint than it is to adapt your capabilities to a whole new sector.
When your company is fully committed to achieving a very specific vision and knows what it can do, it’s easy to distinguish between work that’s worth taking on and work that isn’t. Don’t waste time and resources trying to fulfill needs that you aren’t committed to fulfilling.
3. Be open to change.
Adapting and evolving are essential to moving you closer to achieving your vision. For example, an engineering firm based in Texas was growing rapidly and decided that it no longer made sense to participate in the state’s disadvantaged business enterprise program. At the same time, this firm realized it wasn’t sure where to channel its newfound resources.
After a series of internal interviews with employees, the firm made a bold decision to shift away from working on projects for a government agency to instead survey communities to prepare them for meaningful growth. This work was more aligned with its employees’ collective passion for enriching communities.
There’s always an economic risk that comes with aligning your business around a greater purpose. This particular firm went from primarily serving one client (with many heads) to serving many, many clients to meet the same revenue goals. When you’re expanding into new industries or shifting focus, it will take long-term strategy to change course. Leadership has to be prepared to weather the storm, lean on reserves and make tough calls.
If those difficult decisions will ultimately help align work with passion, however, it will be worth it in the end. That Texas-based company has positioned itself for much greater long-term success: The firm’s Net Promoter Score is above 70, which is incredibly impressive.
Planning for the future isn’t rocket science. Steve Jobs once said, “The only way to do great work is to love what you do.” Take the time to think about where you want to have the greatest impact. Start aligning your work around that vision now, and you’ll be in great shape to move forward the next time the economy goes south.