Friday, November 07, 2008

Strategic Alliance May Help In Down Economy

In any battered economy, business owners are always looking for ways to cut costs but still grow and succeed. A strategic alliance may help some firms surviving through this recession.
A strategic alliance is not a merger or an acquisition, and it’s not outsourcing. As opposed to an outright merger or acquisition (where two companies become legally one), a strategic alliance involves two companies that pull together to share resources, funding or even equity on a long-term basis.
Strategic alliances aren’t for everyone. For starters, entrepreneurs must be flexible enough to work with their new partners. To accomplish this, entrepreneurs will have to give up some company control, a tough task for many entrepreneurs who have nurtured "their babies" since birth.
Finding the right partner is also a key to success. Partners should be involved in a similar industry and share similar business philosophies on growth and future goals.
--Ron Ameln, SBM

Tuesday, November 04, 2008

Is Panic Best Way To Deal With The Downturn

"We have nothing to fear but fear itself" --Franklin D. Roosevelt
Maybe Roosevelt knew what he was talking about after all. After meeting with a group of business owners last week and discussing the future of the economy, this quote came to mind.
Panic and fear are certainly the words I would use to describe business owners as they prepare for 2009.
Now, this is my first economic downturn as an entrepreneur. That's my disclaimer. I'm certainly a rookie when it comes to managing your company during an economic downturn. However, I'm seeing things from other owners that don't make a lot of sense.
For example, one owner I know just laid off 10% of his workforce. Not because business is bad this year (it was an average year) but because he fears it will be bad in 2009. He doesn't really have any evidence of this (vendors haven't told him, customers haven't told him, etc.). His fear comes from the media and talking to his friends, church members, etc. Since he's expecting the worse, he figures he might has well downsize, hunker down and just wait until the economy recovers.
By taking out 10% of his workforce, I can't imagine his company being as strong in 2009 and beyond.
I just don't get that. Now, if the first quarter starts out poorly, I get it. But is this really the right way to pull your company out of an economic downturn?
The bad thing is that once this starts, every company starts feeling the pressure to do the same and we all start feeling the economic pinch.
At our company we're taking a deep breath and really focusing in on what makes us unique and what will help us generate revenue in the future. Do we have contingency plans if our sales go South the first quarter of the year, you bet. But I'm not going to let someone on CNN spouting off about the economy persuade me to panic in managing my company.
--Ron Ameln, SBM