A lot of times when a CEO looks at good economic conditions, like right now, they feel like they need to do two things at once.
First, they want to dig in. With all we’ve been through recently, no one wants to face the next downturn without a solid foundation. This is old school. It means balancing the books, giving raises to key people, replacing one critical piece of equipment. Reducing risk and just continuing what’s working.
Second, they want to ditch all that and use their foundation as a launch pad. Since everything in today’s economy is changing so quickly, they know that they can’t stand still. They want to use their success now to launch a business for tomorrow.
To a lot of CEOs, it seems impossible to do both at once. But it’s not.
Foundation or Launch?
This challenge is really becoming acute in the U.S right now. Last year was the fourth in a row that businesses earning $5 million or less increased their net profit margins. That’s bottom line, and when the number comes in this year, I bet it increased again, because this is what they’re doing with it: in September alone, businesses with fewer than 50 employees created one out of every five new jobs in the country. Government spending as a share of GDP is the lowest since 1950, and the economy accelerated to a 2.9% growth rate in the third quarter, driven by the private sector.
That’s pretty good. If everything just keeps going exactly the same way it is right now, then you’re tempted to dig in for the long haul and make sure you get your share. But, of course, you know full well that things will not keep going exactly the same way they are right now. That’s just not going to happen, especially not in the coming decade. Where’s the Uber or iPhone in your industry? Which of your competitors will introduce a subscription model that takes over your market? Will it be you, or are you going to scramble to catch up?
The pressure is intense, especially when you’ve got dozens or hundreds of people depending upon your enterprise for their well being. And it gets more intense. There are about 29 million businesses in the United States with fewer than 500 employees — “small” businesses. That’s 99.7% of all of them. For the most recent quarter they’ve got records, 205,000 businesses “exited.” That same quarter, 220,000 started up. And that delta keeps getting bigger:
With so much activity, you could easily miss the newcomer with the idea that will change everything.
So what do you do?
Play to Your Strengths
First of all, small businesses created only one out of five jobs. Four of them were created by bigger businesses or the government. Right now unemployment in the U.S. is so low that it’s a buyer’s market. So the most critical thing for executives to realize is this: right now, you have a once-in-a-lifetime opportunity to attract and retain the best talent in the country.
Small businesses need a different breed of person than would be absorbed into the government or a bureaucratic corporation. You need someone who thrives where they’re really needed. You need people who are proud to be held accountable. You need people who care about your company and who will come up with the great, original, disruptive, game-changing idea that will launch you into the future. In a down economy, a lot of them would take whatever job they could get, ending up in government or big corporations. But today, it’s different.
If all you’ve got is an entry-level position, it might seem absurd to bring those considerations to the hiring process. It’s not. In fact, even in that situation, you’ve got a lot to offer. Play to your strengths. That means providing meaningful work, the opportunity for personal and professional development, an engaging work environment, and the chance to make a difference to the business’ future.
New hires and the people on your existing team want to succeed. They want to point at your success and take credit for it. The more skillfully you channel that energy, the more you'll get from your people, and the more they'll want to give.
So right now, plan your launch. If you don't know what you're launching, we can help you figure it out. If you don't know how to plan your next steps, we can help you there, too. In fact, strategic planning was central to the 20+ years of consulting we did before building RESULTS. It's the most solid foundation you can build. And it is, by far, the best launch pad.
Image by Jeremy Bishop