Business-as-usual may be the best approach for companies looking to ride out the rapidly changing economy, experts said Friday during The Chairmen’s Roundtable on “Doing Business in Tough Times” at California State University, San Marcos.
Keynote speaker, Paul Brown, president of Expedia North America, said good business strategies transcend fluctuations in the market.
“Doing business in tough times is really just doing business,” Brown said.
As president of Expedia Partner Services Group, Brown oversees not only trip booking site, Expedia.com, but also subsidiaries Hotwire.com. Hotels.com and TripAdvisor.com among others.
While Brown is concerned about the potential effect of the market on Expedia, he is optimistic about the future.
“What goes up will eventually go down and then go up again,” Brown said. “Consumers are just pressing the pause button.”
In dealing with a shrinking economy, it is important for companies to stick to their core values and ensure employees feel ideas are important even though the company may not be able to invest in them.
“It’s the way you manage through those challenges that’s important,” Brown said.
In tough times companies need to redefine for employees what constitutes success. When growth is impossible and stock prices down, it is important to find other measures of success. Brown has found such standards encourage his own employees.
“We do continue to outperform the market and we do continue to outperform our competitors,” Brown said.
Panelist Bob McRann, principal of RGM Consulting Inc., advised business owners to increase their liquidity, even if it means drawing on their line of credit and placing the money in a Certificate of Deposit account.
“It protects the business in case the bank decides not to give a line of credit,” McRann said.
Other ways of increasing liquidity include leasing capital equipment rather than buying, offering customers one-percent discounts to pay up on their accounts and cutting the jobs of unproductive employees.
Holly Green, CEO of The Human Factor, Inc. disagreed with McRann, saying now is not the time to cut back staffs. When the economy does recover, employers will find replacing employees is costly due to the time invested in training them.
“People are expensive to replace,” Green said.
Panelist Bill Loft said well-diversified companies will fare better in the economy than others.
“I know architects that were designing $8 million homes, but they kept one foot in designing public buildings and now they can fall back on that,” said Bill Loft, CEO of Zuum Craft.
Although diversification will give companies a leg up, Loft urged business owners not to take financial risks and enter fields in which they have no expertise.
“It’s a very good time to be diversified,” Brown added, “It’s a very hard time to become diversified.”
The timing is also off for those looking to sell their companies, McRann said. Those in a position to purchase are looking for good deals, not to pay a profitable price.
“People with money are bottom-fishing,” McRann said.
Panelists’ advice to such business owners was the same as for others: hunker down and remain confident the market will rebound.
"It is important to operate with calm confidence," Green said.