Industrial Distribution

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The Upside Of A Down Turn
June 9, 2008

Is there an upside to a down turn? Absolutely.

In a down turn, those businesses that need to be purged from a market are purged—an economic Darwinism. Some businesses so poorly serve their customers that they really need to go out of business and make room for those that serve customers well. Sometimes this happens in a good economy; most assuredly it happens in a tight economy.

In a down turn, those businesses that embrace innovation and efficiency seek ways to function profitably in their new reality. This can change the market in a positive way and these suppliers emerge stronger than they were before the down turn.

In good economic times, companies have more cash than time and are less vigilant how they spend it. In a down turn, there is less cash and more prudence in how they invest it. If the business learns the lesson from a down turn, it can leverage that knowledge in good times.

So, those of you willing to learn and adapt have nothing to fear from a down turn.

Posted by Tom Reilly on June 9, 2008 | Comments (2)