Who wins in a downturn?

It’s no secret in late May, 2016 that Calgary’s, Alberta’s, and even Canada’s economy is not doing all that well. Beyond typical ‘feast or famine’ economic cycles that accompany a resource-based economy like Alberta’s, this is as bad as we’ve seen it in more than 30 years. But you don’t need more depressing news, and this blog is not supposed to be a downer!
The reason I highlight the misery is to point out that even in a down economy, there are winners. Even more so, I want to explore WHY some people win when the economy itself is in a state of atrophy.

Let us start by acknowledging that some businesses are A) nearly recession proof, and B) positioned to benefit in an economic downturn. While we’ll touch on both of the above points, few among us stand to benefit from these advantage points, so we will mostly explore how any company can better position themselves.

In terms of recession proof businesses, basic needs stand out, as do vices. We still need to eat, though we may change our spending patterns. In a strong economy, we may opt for nicer restaurants, more expensive cuts of meat from the butcher or grocery store, or we may dine out more frequently. In a downturn, we may be forced to choose pizza or a sub sandwich over steak, and fine dining might turn into fast food or diners. Depending on economic sector, the total spend can remain relatively constant, though there may be a significant shift among vendors. Many entrepreneurs have adapted to this, by diversifying their portfolio, and within a master brand offering multiple sub-brands (ie Cara Operations which owns Harveys, Swiss Chalet, Montana’s, Milestones, Kelseys, East Side Marios, and St. Hubert).

Another example, perhaps one even benefiting from a recession, is our favorite vices.
People are still going to drink (or gamble), but they may choose to do so less frequently, or whenever possibly, more affordably (ie at home, or less expensive brands, see this article).
Other winners in this recession range from pawn shops, repossession businesses, and even benefit providers (as employers look to stretch their benefits dollars and get more creative in their coverage).

At first glance, it’s easy to attribute these businesses and industries’ success to ‘luck’ or to being positioned to win by unpredictable, uncontrollable market forces.
There are a few things that businesses can do to be more agile and more opportunistic during a recession however, as follows;
1. Gain market intelligence: rather than waiting for mass trends to emerge as customers ‘vote with their feet’, meet with current customers, analyze early shifts in spend patterns, and develop analytic processes and/or tools to give your business a predictive advantage that can help you be more proactive- and less reactive- in your decision-making and strategy.
2. Focus on your current customers: low-cost and even no cost initiatives such as thank you cards, emails, phone calls, and coffees, or even networking events – all remind your current customers that you value them and that you haven’t forgotten about them. This is actually one of the fastest ways to improve your bottom line – research by Queens University (2015) shows that improving customer loyalty even 1% can improve profitability by 11% – profound!
3. Cut back on costs: rather than waiting for your net income to dwindle from healthy returns into bleeding into the red, reduce discretionary spending (both corporately and personally), and delay optional and non-essential projects. Even if you spend the same amount, but can delay your expenses (without pissing off suppliers or acting unethically), you can improve your cash flow.
4. Balance your balance sheet: for business who have investments, inventory, equipment or machinery, and anything else that has a financial value or cost associated with it that could affect your liquidity, do the math, and see what can be done to improve solvency early rather than waiting for desperation mode to set in when you’ll need to sell off remaining assets at a fraction of their value.
5. Get back to the basics: challenging times bring out our creative and operational bests. Sometimes it takes a financial crisis for us to sharpen our axes and refine and improve the efficiency of our operations. With strong discipline, and keen strategic focus, companies can identify (or recapture) their profitable ‘core’; that which they do better than their competitors.
6. Innovate: by staying disciplined to your profitable core, you uncover your strengths, as well as the target market you serve. These are great pillars to innovate around, for example customer loyalty programs born in the business to consumer (B2C) world might have fewer hurdles to profitability by entering to B2B (business to business) realm than by trying to sell new products they are not experienced producing to their existing customer base.
7. Gain market share: well-positioned companies who are disciplined with their cash flow management heading into a recession often find themselves in a position to target their competitions’ customers, or even acquire smaller companies at a fraction of their market value to gain a higher portion of their given market share.
8. Continue (prudent) advertising: According to research by Queens (2015), companies that maintain a reasonable spend on advertising during a recession recover faster and gain more market share than companies that strip this expense. This is due (according to professor Ken Wong) to the notion ‘share of mind’. When customers are spend-averse, they sit on their wallets. When their consumer confidence returns, they go with who they trust (which is largely tied to who is top of mind).

Thanks for sticking with me this far – a long read today, but very relevant based on what a lot of companies are facing in Alberta (and even Canada) right now. I’d love to hear your comments & suggestions for other topics as well, leave a comment!

Keep healthy, keep inspired, keep livin’ the dream, and let me know how InSite can help!

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Values based leader interview: Tony Spoletini, Spolumbos

As you hopefully read already, InSite is about developing and celebrating a new wave of leadership; leaders who intentionally focus on both profit and purpose, strategy and sustainability. In short, we can call them Values-Based Leaders. These are leaders you can trust, whose mission it is to build great businesses, and build up the great people within them.

Today we are profiling one of Calgary’s great businesses, and one of its favorite sons, Tony Spoletini of Spolumbos.

 

 

Values based leaders interview: Tony Spoletini

As a Calgary native who played football for the St. Francis Browns and Calgary Dinos, I had many heroes I looked up to on the football field, and Tony Spoletini was near the top. Every kid has heroes and role models, and nothing inspires the everyday blue-collar kid more than someone who has walked the path before them and made it big time. Why else would the city of Philadelphia erect a statue of a fictitious boxer? Who do you think kids in Cole Harbour, NS (or Canada, in general) think of the first time they lace up their skates?

At any rate, Tony Spoletini was a great person to look up to because he had attended the same schools I had, and he had a brilliant football career. To be the hometown kid who was an all-star and then a university standout and then play for the hometown team (after a year playing for that green & gold wearing team up north), was an enviable path that most athletes would love to emulate.

What makes Tony Spoletini special, however, is not just that he was talented and worked and earned his way into the rare air as a professional athlete. Even after a 4 year professional football career Tony (with his co-founders Tom Spoletini and Mike Palumbo) set new goals and took the entrepreneurial risk to try and make great sausages. Enter Spolumbos Fine Food & Deli (www.spolumbos.com). Back then, in Tony’s words, “No one marketed high-quality, gluten-free sausages”. They wanted to change the image of sausages from “lips and ears” to their high-quality vision. Even finding success in professional athletics and business is still not quite why I asked Tony to sit for an interview.

I wanted an interview because Tony Spoletini exemplifies the qualities of values based leadership, as so few leaders in business do today. Tony credits the founding trio’s football background for the foundation of their value of team, “everyone is treated equally with integrity”. This is immediately apparent when one sits down in Spolumbos and watches the way Tony interacts with his customers. At the time of our interview, the place was packed and everybody wanted to talk to Tony. He came over right away and offered me a cappuccino, then when he could sit down, was very apologetic about starting our meeting 3 minutes late despite people approaching him left, right and center needing something.

When asked how Spolumbos invests in their team of 40, to try and mimic the sort of excellent customer service that one of their founders gives, Tony cited “proper training and support” and “no degrading. What happens on the field stays on the field”. Tony went on to say that although he had coaches who had to ‘lay the law down’ at times, he always respected those coaches who could do so respectfully, and wanted to emulate their leadership one day. Tony elaborated in that although discipline is an everyday part of business and leadership, there is never a reason to ridicule a team member in public, and even if things aren’t going to work out, “there are dignified ways of letting people go”.

“Leading by example” is one of the keys for Tony to get the best effort from the team daily. He also adds “treating people with respect, and demanding respect for each other” as integral to the team success. That success in business is dependent on “service, quality, and corporate responsibility” according to Spoletini. Tony credits his partners with being able to juggle these potentially competitive tasks, as “one of us can be handling the business while another is working with our people”. Delegation is kay, remarks Tony, to this formula.

Spolumbos corporate responsibility is rooted in youth athletics, and health initiatives such as kids cancer treatment & research. To Tony, youth sport “gave us our start” and so he, Tom, and Mike want to help other future leaders get their start.

As for the future, Tony suggests “you’ve always got to be getting better”. After 20 years of success and building a reliable, trustworthy, household name of a brand, the key is to innovate around service and quality, and to “look for new opportunities without overextending”.

His advice for other leaders of future entrepreneurs? “It may sound cliché, but keep things simple, and treat others how you’d want to be treated”.

My experience is that these words are not cliché, but authentic and stemming from genuine care. As I was leaving, Tony was emphatically gracious and thankful for me taking the time to meet with him, despite the fact he had to run off right after to a waiting meeting, and despite the fact that I was the one who asked him for the meeting.

Spolumbos truly is a great example of a business that you can feel good about what you are buying, and who you are buying it from.

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Welcome to Insite!

Welcome to InSite Business and Performance Coaching! Like any start up, what you see here is the sum of a lot of hard work, blood, sweat, tears, and lessons learned over a lifetime.  As you may have noticed if you’ve spent any time on our site, my passion is connecting with, coaching, and teaching others. You can read more about that in the ‘about us’ or ‘services’ page, but for now I want to thank you for visiting, and for reading our blog!

I hope you are able to learn something, and find value in what we have to share. For today’s post, as InSite’s founder, I am kicking things off with a personal message of thanks, and some quick perspective.

My mentor, Matt Young used to tell me, “The hardest part of any race is getting to the start line”.  He was right.  As InSite goes live, what will feel like a new business to everybody else has been more than 2 years of studying and gaining additional credentials, building the business model, populating resources and tools, testing the business model with our initial clients, and all the legal and administrative aspects of building a coaching practice. Challenges aside, it’s all worth it, as stated in our top Core Value at InSite,

Livin’ the Dream: Life’s too short not to be doing what you love, and it’s too long to be unhappy. We believe it’s better to be scared & uncomfortable passionately chasing your dream than it is to be comfortable but not fulfilled. In fact, we named it InSite Performance Coaching LTD rather than Inc. because to us, LTD stands for Livin’ The Dream!

As we approach the start line and begin the marathon that is building and scaling our coaching practice, I thought I’d share the Iceberg analogy that is our approach to helping our business clients. Developed with Lindsay Jeans from Olive West Design Co. (who is amazing by the way), the Iceberg was chosen for a reason;

(see below)

ICEBURG

  1. Like success, there is a very small visible component, but most substance remains beneath the surface. To create a healthy bottom line, a positive balance sheet, and to have any strong financial or performance indicator moving in the right direction (which is measurable), there must be a tremendous amount of substance when it comes to the ‘intangibles’ (the unseen part of the Iceberg) such as vision, a strong mission and purpose, great people and great leadership. In short, an amazing culture becomes the foundation upon which great processes can be built in order to create amazing results and a multi-layered competitive advantage.
  2. The ocean can both drive us (via strong currents) and fascinate us (it can be hypnotizing to stare off into the horizon where the sea meets the sky; or at the waves lapping at the shore). The same is true for a strong purpose: it should stir us emotionally, often at the same time exciting and scaring us; as well as compel us into action bringing into the fray all of our faculties, the very best version of ourselves. This is why the ocean (purpose) represents the ‘irresistible force’.
  3. The immovable object that is the majority of the Iceberg represents the people in any organization. If they are not bound together by a strong purpose, common values and shared objectives, cracks form and the ice can chip away. When everybody is working together, the team is unstoppable and even warships dare not take an Iceberg head on.
  4. The tangible or visible parts of a business are those things that can be reported, measured, inventoried, bought, or sold. Profit and loss statements, KPI reports, balance sheets, and even a business valuation readying your business for sale – all depend on your team to execute in order to produce the results your business wants and needs. Very few can appreciate the tireless, unseen efforts of the many to produce tangible results.
  5. The ‘blue sky view’ is analogous to optimism, having a dream, and having the vision to picture an ideal desired state. Using the Iceberg analogy, at InSite we work with you to identify the ‘blue sky view’. The color blue is also associated with opportunity (ie blue water strategy is akin to market domination or even new market creation whereas ‘red water’ refers to an overcrowded, highly competitive marketplace). We identify the results you want and need, then reverse engineer how to get there knowing it’s a complex and dynamic process.

Thank you for bearing with a rather long read to kick off our blog, but we are proud of our comprehensive and unique approach, and we wanted you to understand what makes us different to help you find the best advice you can as you scale your business and ink what will become your legacy.

Thanks for reading, and come back often for updates, resources, and offers from InSite Performance Coaching!

Stan Peake