What Is Your Upturn Trigger?

2008-09 has been a study in business defense. Adjusting staffing levels, hedging operating budgets, and rethinking strategies has consumed most small businesses – and it is getting kinda old. We all seem to be waiting for some sort of sign that will trigger us back into business offense. If defense is characterized by control and saving, then offense has to be the willingness to take some risks and bet that there is more available upside than downside. The past couple of months have proven to a lot of folks that recent upticks of activity have been just bursts and not trends. What will be the your true indicator to switch gears? Here are a few potential triggers and my assessment of what they could mean to the Audiovisual events industry:

Stock Market: Conventional wisdom says that when the DJIA tops 10,000 that life returns to normal. But I caution that the corporate events market lags about six months behind the stock market. That could mean an uptick in business by late spring – just when business starts to fall off for the summer. Also, many folks believe that the current market levels are not sustainable. Financial bubbles (such as commercial real estate) are still looming and that the current stock market is being fueled by trading rather than value creation.

Unemployment: Another indicator would be the trend in unemployment rates. Currently we are hovering around 10% on a national average and recent numbers were close to flat. Employment trends move much more slowly than the stock market, so the first reduction in unemployment could trigger aggressive activity from events customers.

Increased Revenue: Seems simple enough to declare your recession to be over when business is up – but beware of spikes. I have spoken to a number of companies that have had record-breaking months recently, only to return to unmemorable results the next period. I recommend that you monitor consistency of revenue. Setting aside any large outlier projects, are the upcoming months behaving predictably? In 2009 many event companies were expecting high volumes in Q1 only to be disappointed by a high cancellation and downsizing rate. I think that one full quarter of predictable revenue at any level is a good indicator that your have reached your upturn. It may not be the starting point that you wanted, but at least you can focus on rebuild instead of just survival.

Increased Profit: Waiting for profits to return to declare the recession over? Oh no! You should be profitable now since you have been making adjustments to your business for at least a year, right? There is some logic that says once margins improve business will follow, but you have more control over profits than you do revenue so I think profitability is not a good indicator of economic upturn. Profit is a great indicator that you have done all the right things to be ready for the upturn.

What does a switch to offense mean? For one thing, it could represent the opportunity to hold the line on margin. Demand could once again begin to strain supply and drive service prices up a bit. High service businesses will be the first to enjoy the fruits of their differentiation. Contractor and transactional businesses benefit second. Offense could also mean its safe (or safer) to initiate new strategies – take a little risk. Execute a new marketing plan, open a new market, or introduce a new product or service. Make a plan and choose your upturn trigger so you can be ready to unleash all that pent up post-recession success.

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