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It’s Time to Recover: Recession Recovery Tips for Small Businesses
An economic recovery is closer now than it has ever been. Now is the time for companies to start considering post-recession recovery strategies so they will be ready when it does finally arrive.
By DeAnna Stephens Baker
Date Posted: 5/1/2011
It is time for companies to start thinking beyond survival and begin planning for the future with a post-recession recovery plan.
Granted, views on how close the economy is to a recovery are mixed within the pallet industry. However, even with some companies still experiencing largely fluctuating demand, many can list specific signs that indicate a recovery is on the way. Despite the fact that they have not been actively seeking new business, Anderson Forest Products (AFP) in Tompkinsville, Ken. is at 90% capacity.
“It does seem as though we have turned the corner,” said Kerry Anderson, AFP vice president. “Our order file is much more consistent than in previous months. Customers are requesting extra loads and moving orders up.”
Phil White, president of General Pallets, which has several locations in Arkansas and a diversified customer base including many national accounts, said that although he does not think a recovery has started, the recession does seem to have leveled off.
“With forecasts that I have been provided, I do see some improvement with select manufactures but not across the spectrum,” Phil said. “My personal feeling is that things will look much better this time next year but I have concerns of inflation.”
Other industry members, such as Kathleen Dietrich, vice president of Priority Pallet in Beaumont, Calif., are still dealing with unpredictable market conditions.
“I would be very hesitant to say that, at least in our Region, we are at a
post-recession point,” Kathleen said. “We are experiencing ‘slows’ and ‘surges’, but consistency is not yet a part of our vocabulary. Additionally, with all the changes that are occurring in our industry and our country and the many challenges we are facing, I’m not convinced that this recession is going to be over any time soon.”
Regardless of what is happening in your region and markets, now is a good time to begin thinking about where you want your company to be several years from now when, hopefully, the recession will be only a memory. Even if you are not yet seeing post-recession conditions, consider the following strategies for creating a plan to lead your company through the recovery.
1.) Find Top Products
Determine which of your products or services have the best growth potential. Do this by studying revenue charts from the past few years. Which product lines saw an increase, or at least steady, income? Once you have found which products and services are profitable now, focus on making these the best they can be. Study your competition and find ways to be different.
This is also a good time to note which products and services are not doing so well and figure out why. Is there no longer a demand for them? Have you lost large customers to competitors? If a product is not turning a profit, consider reallocating your resources to one of your more profitable products.
2.) Consider New Markets
Right now is a good time to look into expanding into new markets. New markets could include expanding your geographical service area, looking for new types of customers, offering a new service, or manufacturing a related, but new product.
“We are taking a very close look at getting out of our box of just doing new and repaired pallets and researching what other type of wooden commodity might be a seamless fit for our companies,” said Kathleen Dietrich.
Companies that previously served those markets could have closed or down-sized, creating an opportunity for your company. Looking into the possibility before an economic recovery is underway might also lessen the chance that any competition might fill and monopolize that niche. Waiting too long would enable other companies to be in a better position to withstand competition.
3.) Renew Sales and Marketing Efforts
If your sales efforts have dropped during the recession, due to cuts in
personnel or for other reasons, now is the time to increase your marketing and start contacting old and potential customers. The good news is that due to modern media trends, increasing your marketing does not necessarily mean huge cost increases in your marketing budget. Websites and email marketing are low-cost ways of marketing your products and services and keeping your company visible to past and potential customers. Consider sending out a monthly or seasonal email to your customer list or update your Website to improve its search engine ranking. In the emails, you could include information on sales and special promotions, new services or products, and news that affects your customers.
4.) Stay Educated on the Industry
The recession has changed the industry and you need to understand those changes to keep up with them. Follow demands and market trends by reading market reports, such as the Pallet Profile Weekly, and attending trade shows and seminars. For example, information from a recent conference led General Pallets to switch one of its facilities to producing block pallets. The managers of this company believe this decision will give them the ability to achieve the goals they have set for the next three years.
“At the NWPCA Annual Conference in February there was a presentation by a COSTCO representative,” Phil said. “The discussion of their efforts to advance the requirements of block pallets has caught our attention. This is an area we have not focused on in the past, although we have provided block pallets to some customers, mainly military requirements.”
Keeping yourself educated is key to staying ahead as it will enable you to anticipate and meet future market demands.
5.) Evaluate your Inventory
While bloated inventories have been a problem for some over the past few years, you need to be able to fill your customers’ orders on time. Slim inventories could be an issue if a large order comes in. Evaluate your inventory levels to determine how large of an order you would be able to quickly fill if needed. Part of this includes looking at your supply lines. With the number of sawmills that closed, former supply lines may not be as reliable as they once were.
“We are firming up our supply base,” said Kerry Anderson. “We feel as market conditions improve there will be some pressure on the supply side. There’s not near as many mills now as there were a few years ago. I am not sure people will be very excited about jumping back into the sawmill business.”
Talk to your vendors to get an understanding of how quickly they could fill your orders. You need to be able to know that your supplier will get you what you need when you need it.
6.) Stay efficient
You should already have found how to make your operation as efficient as possible. Don’t slack off now. Maintain the practices you have developed to run your operation more efficiently. Reward top performers and create a culture of constant innovation that seeks to find ways to do things better, faster, and cheaper.