Winning in economic crisis
When you unwrap your lunch today, think about who is winning in the economic downturn. One of our group customers in Hong Kong, a manufacturer of plastic wrap, told us his company is recording higher sales turnover these days as people are cooking at home more and eating leftovers to save money.
There is no question that the current economic downturn presents difficult operating conditions, but there are business opportunities for those who know where to look. The headlines may be doom and gloom, but as a business bank, we have seen again and again that businesses that quickly accept the reality of the situation, adapt and find creative ways to manage have a very good chance of not only surviving crisis, but thriving in the long run.
Understand customer needs
Obviously, companies are not the only ones who are being impacted by the economic crisis, consumers are also trying hard to adapt to the difficult times. But do you really know what they need to manage their own situations? Understanding your customers’ view allows you to serve them better.
In view of the declining economy, one of the high fashion jewellery companies we bank in Hong Kong understands that people will be less willing to spend money on high-end luxury items, so they shifted their focus to more affordable jewellery. Their growing sales turnover has proved the wisdom of that strategy.
By understanding your potential customer base and their purchasing behaviour, you can more accurately cater to their buying preferences and strengthen relationships with them, and thus have a better chance to sustain your business long-term.
Another of our group business customers, a fast food chain, has come out a winner by taking advantage of two aspects of the downturn to open up new outlets. The management was able to anticipate the growing market demand for fast food and thus promptly grasped the opportunity to start new leases in view of the slumping rentals in the property market.
Watch the competition
Apart from market demand, it is important to know your market competitiveness. A ceramics company, another group customer of ours, has been able to increase profit margin by raising its prices since as a number of competitors have shut down.
Don’t stop marketing
Of course, every business needs to be careful with costs, but think twice if you are considering stopping your marketing initiatives. It is comparatively more cost effective to get attention from customers in a down market as the competition withdraws. Instead of cutting down on marketing, one IT services company in Hong Kong is doing more to reach potential customers now. The owners foresee an increasing demand for IT service vendors as many companies restructure or close down their in-house IT departments to reduce costs. Customers are not just going to come. You have to advertise.
Economic downturn is part of a cycle and tough times don’t last forever. But by viewing the downturn as a shift to new opportunities, rather than the end of opportunities, and making the effort to understand the new reality of the market and customer needs, you will be able to run a resilient business that can grow quickly when the economy bounds back.