In the New Yorker recently, James Surowiecki wrote:
“Numerous studies have shown that companies that keep spending on acquisition, advertising, and R&D during recessions do significantly better than those which make big cuts.”
I want to know if managers in big companies have any other response to a downturn apart from budget cuts and layoffs. Surely the one thing we’ve learned from this clusterf#@k to the poor house is that Wall Street knows nothing about running a business. So why do companies pander?
I don’t want any part of that. They’re all Apprentice candidates in a Dragon’s Den world. They’ve got it wrong.
For the last nine years, I have tried to be a one-man multinational. A little big company.
This means trying to emulate the best aspects of big companies:
- Benchmarking myself against big companies that I admire (mostly financial metrics but also more practical or HR type things).
- Aiming for world class service, especially consistency and reliability.
- Constantly investing in new products and services like my new presentation training business.
- Equipping myself with business-class technology like high-end email servers and extranets.
- Working globally (I have clients in the UK, the US, Switzerland, Sweden and I’m learning Dutch).
It also means taking advantage of the strengths of being small:
- The personal touch – what my clients see is what they get (plus proofreading and graphic design elves that make my work even better)
- Low overheads. This means lower ROI hurdles for new investments.
- Direct communications. Read The Mythical Man Month and Other Essays on Software Engineering
on why more people means much more time wasted on communications.
- Time limitations challenge me to work smarter and concentrate on adding value rather than adding effort. (“Since I couldn’t make my days longer I strove to make them better.” Thoreau.)
- My obvious is my talent. I don’t need a mass market. I don’t need to dumb down or work to the lowest common denominator. I just need to find enough clients willing to pay for my unique combination of skills, insight, curiosity, talent and hang-ups.
- Marketing is meeting people. If people meet me, like me and find what I have to say useful, that’s enough. I just need to be myself. That’s pretty easy to do.
- No employees. I can spend my time on client work and business development; not on management stuff. I used to have 70-odd employees and, believe me, management stuff takes a lot of time.
- I’m a contractor so I’m good at working with other contractors. I know how they think and what they need. I use all kinds of specialists: proofreaders, graphic designers, cameramen, directors, actors. I think this ability will be more valuable than the ability to manage people in a conventional business sense.
I think this is the time of the freelance professional. Small companies can already outshine huge, established brands. But it helps to remember what our strengths and opportunities are. And it helps to think hard about our reaction to the recession. I don’t want to bury my head in the sand.
According to Surowiecki, companies can prosper in a recession by wise investments in:
- New product development
- Advertising, PR and go-to-market
- Acquisitions (the best time to buy something is when it is cheap, after all.)
This is what I intend to do. Well, not necessarily the acquisitions bit but I am looking a new business opportunities and various kinds of outsourcing. I am developing new products and services. And I’m working hard on marketing.
These are interesting times and I think the lesson of Surowiecki’s answer is not just to be good at what you do and hope for the best. “Today, most companies are far more worried about sinking the boat than about missing it.” Instead, I think we have to try to transcend ‘business as usual.’ As Roosevelt famously said, quoting Virgil, “we have nothing to fear, but fear itself.”
Normal isn’t. Good enough ain’t. We have to aim higher. This is the opportunity inside the crisis.
What are you doing about the recession? How are you changing and reacting? What can you do this month to be more proactive?
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Hear, hear! Although I had started to come around to the idea of small being the new big before the recession, I am now fully convinced. Thanks for this great post which really distills why small is fabulous!
As a one-girl show since 2003 (translation, copywriting, and training services for the French-to-English market), I have worked constantly to hone my positioning and polish my lineup of services, simply as a matter of survival.
However, while business has personally been good for me since the economic doo-doo started to hit the fan in late 2008 — at least in terms of total sales –, it has been much more volatile (with higher highs, and lower, more sustained lows). And those sustained lows (in addition to freaking me out slightly) have spurred me to move from “survive to thrive” by doing a few of the things suggested above.
1 – I invested in a new CRM and spent a couple of days getting trained on it and cleaning up my database – the time savings are already blatantly obvious (bye, bye Outlook!) and the marketing leverage will pay off in the medium- to long-term when I start exploiting a lean, clean database
2 – I redid my Website with Wordpress (no more maintenance fees and total flexibility to publish what I want when I want)
3 – I moved a new business project from the business plan stage to actual launch (I’ll have two new business partners in January 2010 – just in time to profit from the economic recovery…people have told us we’re crazy to start a business in this recession, but we’re gonna prove’em wrong!)
4 – I’ve invested more time volunteering in a couple of business networking groups (organizing events, etc.)
5 – I’ve tried to keep on track with savings goals to have a year’s income in the bank (money in the bank is the best way to stay on target with your long-term business goals even when short-term business is slow)
6 – I am working as hard as I can on the “adding value rather than adding effort” thing (in other words: staying small, delivering as much added value as possible, and selling that added value for the highest price possible)
Thanks, Matthew, for this inspirational post!
Sara, that’s tremendous. Everything you’re doing sounds spot on and I’m really excited to hear other people share my enthusiasm for ‘adding value rather than adding effort’ (as you put it so well). Thanks! Matthew
Hello Matthew:
My first time commenting here, though I’ve been lurking since I saw you on ODesk’s Top 40 Freelance Writing blogs.
Hat off to you–this is a marvelous blog.
I find this post particularly inspiring. I plan to revisit and reread it periodically.
A few things that resonated strongly with me:
* Your accountability as a “little big company.”
*Time limitations. As a sole proprietor service business, I find scaling a huge challenge. Even when I’m fully booked, there are just so many hours in the day. I need to learn to “work smarter and concentrate on adding value rather than adding effort.”
*”I don’t need a mass market.” Yes–especially true for copywriters watching content mills mushroom: It’s impossible to compete on price. The lesson, again, is positioning oneself on value–to the right clients…along the lines of “1,000 True Fans.”
After reading Surowiecki’s piece, it occurred to me that today’s small businesses are better positioned than Kellogg and Chrysler to ratchet up marketing–simply because digital media is so much cheaper than push marketing.
Today the currency is attention. Getting and keeping attention requires more targeted strategy–but costs less–than yesteryear’s all-out media “campaigns.”
Internet supported small businesses today can avoid sinking the boat–and not miss it either.
Lorraine – thanks for the kind words and helpful comments. What you say adds a lot to my post and it’s good to hear that my experience resonates with other freelancers. I think the point about adding value rather than cutting price is the very heart of this. People will pay good money for good work from a good supplier. The trick is finding them and then doing good work and then being a good supplier!