There are no guarantees in life, but there are ways to prepare your business for the next cycle of boom and bust
Tyler Chisholm, the CEO of ClearMotive Marketing Group, says geographic diversification is a must to smooth out revenues, but his advice for others when riding boom and bust cycles doesn’t stop there. “I am a big advocate of using technology any way you can to automate processes to give each employee a bigger reach and a bigger ability to create more,” he says. When it came to recruiting new employees during a downturn, Chisholm opened up on that process as well. “A big part of your recruiting practice is your employee brand and how you are known in the marketplace,” he says. “I feel in times like this, it’s definitely an opportunity because people start moving around, and being a desirable employer and brand can be very helpful.”
Poppy Barley, a custom shoe-making business, avoided the economic recession of 2008 (because it wasn’t around yet), but co-founder Kendall Barber has ideas on how to soldier through a bust nonetheless. “You have to diversify your customer base with a distribution strategy that allows for pivots,” she says. These pivots should include new geographical markets, new partners and new business approaches. Barber says you need to maintain and develop an agile corporate culture, where change and new ideas are embraced and implemented quickly. Knowing this, Kendall elaborates on her and her partner’s plans to expand the business. “From the beginning, we’ve designed our business to scale,” she says. “We’re only two and a half years old, so our business has growth potential within the Alberta market, across Canada and the U.S.”
“The driving pulse for us was regulation,” says Joshua Anhalt, president of GreenPath Energy, a Calgary-based company specializing in emissions management. “People needed us, and we were just able to market ourselves better than the competition.” Founding the company in 2007, on the cusp of the 2008 recession, was scary, but the company pulled through. “It wasn’t one of the best years, but we stayed lean, spent our cash wisely, and it was a rollercoaster,” Anhalt says. “At the end of the day we stayed creative, and that’s what kept us going.”
During the most recent economic downturn in Alberta, he had to scale down his company, including letting one employee go and making cuts to non-core services. “You have to make tough calls. You have to be rational and get realistic,” he says, adding that having mental strength and perseverance is necessary to make those calls, and that you shouldn’t let fear get the best of you.
Handling Cash Flow
In tough times, the company with the best cash flow wins. The most recent ATB Business Beat survey* found that SMEs have changed their handling of cash flow by cutting down on discretionary spending (54 per cent), taking on new contracts (54 per cent) and investing personal resources back into the business (27 per cent). However, when looking at key industries, there is variation in how companies handle cash flow. While the energy and retail businesses seem to view cutting down discretionary spending as a top priority, the construction sector makes taking on new contracts its number one option, with 72 per cent of respondents claiming to do so. When it comes to changes in operations, 60 per cent of SMEs plan to find, or have already found, ways to change their processes. Thirty-four per cent have reduced their pricing or expect to do so.