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Friday, March 13, 2009

FINDING A RECESSION-PROOF BUSINESS


Finding a business that can endure today's economic recession can be tricky. People are tightening their belts more today than in the past fifty years. We are seeing businesses close down, CEO's being replaced, and some rather substantial cost-cutting measures, including salaries and employment. So you have to ask yourself what companies are thriving? Which ones are going to make it and which ones won't?

No, I am not an economist, but it has been my experience that whenever belt's are tightened, people start to think of themselves first and others second. In other words we start to focus on our basic human needs and worry less about luxury items. Let's consider the effect the recession is having in a few key human-centric areas:

Food: Eating out at restaurants is diminishing, particularly the high priced establishments. In my area of Florida alone, over 35 restaurants have closed their doors recently. Not surprising, people are more inclined to cook at home, which means boom-times for value priced items. For example, I understand sales of Hormel's SPAM product are way up. With this in mind, I wonder when the Food Channel will replace some of their gourmet shows with a show featuring something like, "Cooking on a budget."

Health: Drugs are still doing fine, but people are more inclined to buy generic as opposed to name brands. We will probably see a sharp decline in cosmetic or elective surgery, but we will still need to replace hips, hearts, knees, and other vital parts of our bodies. I have a friend who manufactures titanium hips and knees. He tells me business couldn't be better.

Transportation: As we all know, new car sales are way down which means people are trying to extend the lives of their current vehicles. This means companies selling auto parts should be prospering, as well as independent mechanics offering competitive prices. The airlines will always be viewed as a necessary evil but for any of them to succeed, they have to streamline their operations.

Communications: I think cell phones will hold steady, but look for people to change or eliminate their land lines. I have also seen a lot of people cut down on the pay channels on television, as well as their ISP connections.

Housing: Like the automotive industry, sales have stagnated which means people are trying to make do with what they have. And like the automotive after-market, look for the sale of home improvement items to increase, particularly those products designed to save energy and money. This should be boom times for basic hardware stores.

Education: Private schools will be hurt by the recession as people will be more inclined to send their kids to affordable public schools. This includes state universities over private colleges.

In a nutshell, the companies that will succeed are those that address the basic needs of the human being with no frills attached. Luxury items, such as electronics will struggle in the meantime.

But success will also require companies to manage smarter than what they have been doing. They have to think faster to seize opportunities, be more organized and disciplined in their operations, and be more adaptive to change. In other words I think you'll see a "no frills" management style emerge as companies fight to survive. Those companies with bloated bureaucracies and micromanagers will have to be cut down to size in order to manage smarter.

So, what company is recession-proof? That which addresses basic human needs and is managed so the company can turn on a dime without missing a beat.

Such is my Pet Peeve of the Week.

Note: All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For a listing of Tim's Pet Peeves, click HERE.

Copyright © 2009 by Tim Bryce. All rights reserved.