All three major stock indices (the S&P 500, the NASDAQ and The Dow Jones) hit record highs on the same day twice in the last week. The last time this happened was in 1999, and we made it another year or so before the dot-com bubble burst.
I have no idea if another bubble will burst within a year, but I do know we will experience a correction sooner or later. And the key for all businesses is to be ready.
There are several ways to weather a downturn: (1) live super lean; (2) scale back on overhead and employees; or (3) be so competitive that you can expand market share even in the worst of times.
We of course like option #3.
The book “Scaling Up” says that companies need to be 3 – 10x more competitive than industry competitors before focusing on growth. But, once they have their competitive edge, they can grow relentlessly, even during recessions.
The book gives an example of a large building supply company that had so many competitive edges that it was able to expand wildly during the recent “great recession.”
In any case, expect a downturn sooner or later, and make sure you’re ultra-competitive if you still want to grow.
At JVM – we’ll continue to hone our edges: speed, responsiveness, reputation (Yelp anyone?), availability, diligence, training, and congeniality.
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