Why you are not prepared for recovery and you what should do about it
All the signs are here. The pieces are falling in to place. We are going to have a recovery in Live Events.
Some would argue (me, being one) that our recovery began last summer once we accepted that in-person events would be on hold for at least the next 12-24 months. That allowed us to embrace the idea that streaming events were going to be top priority whether we wanted them or not. Now that we can foresee a safe re-opening for mass gatherings by the end of this year, we should expect a steady rise in demand followed by your worst nightmare in 2022: Pent-up Demand.
My biggest fear is that following steady growth in the second half of 2021, that we see a sudden surge – the proverbial hockey stick growth – in early 2022. That might sound great, but hear me out.
Being ready for this to happen is not the same as being prepared.
The top question I am hearing right now is, “Tom, if we are going to be busy then when should I start hiring back my team?” In a steady growth cycle, which is what we saw from 2010 to the beginning of 2020, my response would be “Hire ahead of demand, so you can take on more revenue and earn incremental gross profit.”
The Case for Limiting Growth
Most small business owners become more risk averse as they grow older. If you started business in 1990, you have known 25 years of growth and only five down/flat years (give or take, work with me, so I don’t have to do a citation). Granted, one of those years was a 50-75% drop in business, but let’s not dwell on that.
While I do expect monumental growth in demand in 2022, my worst fear is that you revert to your 2019 business model with its meager margins, high risk, high stress, and reactive solutions.
We can better prepare for 2022 by maximizing the opportunities to come in 2021.
My solution for 2022 is to apply what we have learned to finish 2021 profitably and optimistically. Get better at seeking and engaging new customers. Remember, your pre-pandemic customers will want the old deal delivered the old way. You’ve learned a lot since then.
Pause for a moment and process the implications of pent-up demand:
- You are going to need to turn down business
- You need to know which business to turn down
- The business you choose to keep should be ridiculously profitable compared to pre-pandemic work
- If you have not changed your mindset about the above, it is not too late to start
Focus on Profit Instead
There are three things you need to be focused on right now if you want to maximize your profits over the next 19-24 months.
Fix Your Sales Process
Acquiring new customers is the function of Marketing has been the focus of my posts and webinars in 2021. Your Sales Process begins when a true sales opportunity manifests. How do you optimize the client ‘ask’ to better match your offerings? How do convert the bowtie to a diamond? Write a scope of work? Build an accurate estimate without getting into the weeds? Can you match customer expectations in such a way that the process of engagement closes the business for you?
“We just get the quote out and ask for the deposit,” is one strategy for pent-up demand, but it leaves money on the table and more importantly, doesn’t discern the quality of the customer you end up accepting.
Your goal is to win perfect fit customers at best in class margins. Settling for anything less in a sea of demand is irresponsible.
Rebalance Your Margins
How you make money has probably changed significantly since the pandemic started. Companies that did not rebalance margins immediately quickly discovered that helping clients support Zoom meetings or producing a graduation were extremely labor-intensive, with much of the most valuable work taking place before the event occurred.
To move from making money on equipment to making money on services is a game-changer. Customers also struggled with the perception of value, which further hindered the rebalance. Do the Math says we need to ignore the emotion of pricing and examine the facts. Your survival depends upon it.
Learn When to Say ‘No’
In my book Demand: How to Build a Smarter Sales Funnel So You Can Turn Down Better Business, I amplify the idea that if you have more work than you can handle, then you can increase prices, choose your customers and select your projects.
The path to growth and profitability is paved with the business you wisely said ‘No’ to.
For companies that have never been in a position to say ‘No’ to paying customers, this is a huge leap of faith and understandably scary. Hear me out: If you say yes too often, quality and/or profit will suffer. Balancing supply, demand, and quality is the key to optimizing profit and growing at a manageable pace.
The question you should be asking yourself is whether over the past ten years, you earnestly protected quality at the sacrifice of profit simply because you felt you could not say no?
No one can restore what you have lost in the pandemic, personally, professionally, or financially. We can move forward intentionally and armed with knowledge and foresight. Keep your eye on profit and the rest will fall into place.