Announcements and news
As we’ve discussed in a previous blog post, uncertainty is a growth killer. With so much uncertainty about global events (e.g., the trade deal between the U.S. and China, Brexit, Iran and the nuclear deal, etc.) and how those events might affect the world economy, it’s not surprising to hear experts talk about a looming U.S. economic recession.
Global uncertainty coupled with the fact that the U.S. economy is currently experiencing its longest stretch of economic expansion (beginning in June 2009) is a recipe for a downturn. And as economists remind us, “whatever goes up must come down.”
But even if the growth of the U.S. economy slows, that doesn’t mean your business must follow suit. So let’s discuss how to manage business growth in the face of recession fears.
What is a Recession Anyway?
If you could use an Econ 101 refresher, a recession is defined as a period in which the gross domestic product growth rate—i.e., the amount of goods, we as a nation, produce and sell—is negative for two or more consecutive quarters. During a recession, negative growth is accompanied by
- A decline in personal income and company profits,
- An increase in unemployment, and
- A decrease in production, manufacturing, and retail sales.
Also, recessions don’t simply happen. They are caused by events like a financial crisis, the bursting of a real estate or stock market bubble, or some other “black swan” event that rattles the economy.
Recession fears can be difficult to weather for any and all businesses—regardless of size. The reality is, though, recessions are an ordinary part of the business cycle and just as the economy doesn’t go up forever, it also doesn’t drop indefinitely. So it’s imperative that you keep all of this in perspective if you want to figure out how to manage business growth despite what’s happening with the national economy.
Tips for Weathering Recession Fears
Although each business is unique, the following tips for how to manage business growth even with an uncertain economic outlook are helpful for any size or type of business.
1. Do NOT cut back on your marketing budget.
While recession fears often lead organizations to look for areas where they can cut unnecessary expenditures from their budgets, you will want to do so strategically. Otherwise, what little savings you gain could easily disrupt business growth.
One area that often ends up on the chopping block is advertising and marketing. However, making cuts here is almost always a mistake. During a recession it’s not only essential to maintain your current marketing presence, it’s actually smart to consider expansion. Why? At a time when your competitors are cutting back, increasing marketing spend could help increase your visibility.
Additionally, when others are cutting their advertising or marketing budgets, that could result in media offering deep discounts. If nothing else, more space will be available leaving you the perfect opportunity to negotiate for better pricing with print media, radio, and T.V. As always, questions about business growth go back to ROI. If you invest $1,000 on an ad and make $2,500, that’s a positive ROI and you should seriously consider keeping the ad.
- Before eliminating print ads entirely, reduce the size of the ads (assuming they are cost-effective).
- Look for additional free sources of advertising through social and business networking websites.
- Make sure your signage is working for you to bring in more customers (if you have a physical location).
- Create original content, including press releases, and publish at least once each month.
2. Do business with the federal government.
If you’ve been eyeing government contracting as an area to expand your business, now is the time to kick your efforts into high gear. Whether a recession happens this year or early next year or 3 years from now, being in a position to provide services to the government is always a wise business move.
It is true that government agencies are not recession-proof. But regardless of the state of the economy, government agencies still need supplies and services that allow them to provide for the public. It only makes sense to stay aware of government procurement opportunities.
- Look at sections of the federal, state, and local budgets that provide funding opportunities for your products and services.
- Identify the government decision-makers and potential influencers and build out a complete tree of who is involved in the contract award process.
- Keep in mind that the regional or local procurement officer listed on the RFP is not always the end-user, who is usually the manager and staff within the agency.
3. Enhance your relationships with existing clients.
We all know that government contracting, just like private business contracting, is about relationships. With the possibility of a recession coming, it’s essential to focus on making your company invaluable to your current clients. Whether the decision-makers in your industry are government officials or corporate executives, they all have their list of providers who they know, like, and trust.
Maybe you are already a government contractor and you’re wondering how you can increase the work you’re doing with the federal government. Or you’re looking to grow by expanding to support similar clients in the private sector. Regardless of your specific growth goals, you want to make sure you are top of mind with existing clients.
For this reason, building relationships is one of the best ways to prepare for a potential recession. Just think about it: What you do when you need a task completed in your business and you don’t already have a “go-to” person? You call up someone you know and ask for a few names. You want to be your clients’ first call in this situation. If you can’t help them directly, you can strengthen your relationship by suggesting someone who can.
Additionally, we can’t overstate the power of face-to-face and online networking for these purposes. Within the government contracting space and the private sector, there are events organized by associations, industry media, policy or contract briefings, industry conferences, and more. If you see an event, whether in person or online, that connects to whatever work you do, it is a good idea to attend. You never know who you will encounter who you could call on down the road.
- Increase visibility among key decision-makers by offering a webinar series related to the work you do.
- Offer an online course or training session for your target clientele. Managers and staff are often looking to enhance their skills. When a course becomes available, many agencies and organizations have a budget set aside to send employees.
Conclusion: Hope for the Best and Prepare for the Worst
In business, it almost never makes sense to dwell on the worst-case scenario. However, given the current economic situation, it does make sense to adjust your sails. Managing business growth is not as much about anticipating the economic downturns before they happen as it is about taking advantage of opportunities to grow and making sure you’re ready to do so in the future.
For the moment, the economy is holding steady. So there’s no reason to pump the brakes. But keep in mind that even if a recession hits, fear is not a valid reason to pull back. Continue to look at the data and stay the course unless business growth truly is no longer an option.
Need help figuring out how to manage business growth amidst recession fears? Contact the experts at growth[period]. Remember, a slowdown in the economy doesn’t have to mean a slowdown in your business.
growth[period] Partner Lyn Sherlock, Brigadier General, US Air Force (retired), was the featured speaker at the Women’s Memorial 21st Annual Memorial Day Program in Arlington, VA. The event was put on by the Spirit of '45 organization honoring those who served in WWII, including the over 1,000 Women's Air Force Service Pilots and over 300,000 Rosie the Riveters. Two Rosie's were in attendance: Ms Elinor Otto, who continued building military aircraft until the age of 95, and Ada Wyn Parker-Loy, whose sister was the model for the famous Rosie the Riveter poster.
The event included formal military honors and a keynote address, remarks from past and present military women representing each of the services, and the Memorial’s signature event, the scattering of rose petals in tribute to departed comrades.
Read more about the Women In Military Service For America Memorial here.
The Obama Administration has requested $1 billion in Department of Defense (DoD) reappropriations to augment efforts to contain the outbreak of Ebola in West Africa.
As of late October, the House Appropriations, House Armed Services, and Senate Armed Services committees have approved $750 million dollars in DoD reappropriations, which will come from the overseas contingency operations (OCO) budget, though the Senate Appropriations Committee (SAC) has yet to approve this request. Chairwoman Barbara Mikulski (D-Md.) announced the SAC will hold a hearing on Ebola reappropriations on November 6th, shortly after the midterm elections.
This $750 million would be used for the construction of 17 new medical and treatment facilities, as well as building more support laboratories, training medical personnel, and covering the cost in logistics associated with the deployment of 4,000 US troops to West Africa over the course of six months. The US Naval Medical Research Center currently operates three Ebola testing labs, and there have already been requests for several more; this funding would help cover the cost of opening additional labs and bringing in trained scientists. General David Rodriguez, commander of Africa Command, indicated that troops would be headquartered in Monrovia, Liberia, in coordination with the US Agency for International Development (USAID) and the Centers of Disease Control (CDC). The objective of this initiative is 70% of all infected persons taken to treatment facilities, at which point CDC projections indicate the rate of infections will steadily decrease. In late October, the World Health Organization reported that to date there have been more than 13,700 cases of Ebola in six countries, and 4,922 deaths.
The Office of Management and Budget reported $311.3 million dollars has already been spent by the CDC, DoD, USAID, and National Institutes of Health by October. The items listed below were paid for by existing appropriations as reported by Reuters:
- $1 million in security costs
- $10 million for health workers
- $11 million for protective gear
- $22 million for field hospitals
- $35 million for increased laboratory detection and screening capabilities
- $95 million for the development of medical countermeasures, of which: $8.6 million went to Profectus BioSciences Inc. for the development of an Ebola vaccine; and $58 million for the Biomedical Advanced Research and Development Authority (BARDA)
- $137 million for laboratory surveillance, logistics and relief commodities
The Hill reported in late October that the Obama Administration is in the midst of talks with members of Congress for additional funding on top of the $750 million DoD reappropriations and $311 million already spent. Ranking member of the Senate Armed Services Committee James Inhofe (R-OK) has expressed his concern with the limited six month duration of funding, and has called for longer term appropriations—though he has also expressed great concern over the lack of overall strategy for tackling Ebola.
In early October, General Rodriguez indicated the Ebola mission would likely last one year but could take longer, “We're going to stay as long as we're needed. ... It will be about a year, but that is just a guess… This is not a small effort, and this is not a short period of time.” Additional funding to support DoD efforts related to Ebola beyond the next six months would likely come from additional reappropriations within OCO budget, and BARDA and the CDC will probably continue to be heavily involved with developing and testing Ebola countermeasures regardless of where the next round of funding is drawn.
- U.S. Response to the Ebola Epidemic in West Africa, Office of the Press Secretary, 2014.
- Factbox: U.S. funds to fight Ebola now top $1 billion, may rise, David Lawder, 2014.
- House approves $750M in Ebola funding held up in Senate panel, Kristina Wong, 2014.
- White House begins talks with Congress on new Ebola funding, Justin Sink, 2014.
- Senate Appropriations to hold Ebola hearing in November, Rebecca Shabad, 2014.
- Ebola by the numbers, Rebecca Shabad, 2014.
- TRANSCRIPT: Pentagon Briefing on DoD Response to Ebola with GEN Rodriguez, United States Africa Command, 2014.
- Ebola Response Roadmap Situation Report, World Health Organization, 2014.
- Holdout Senator Frees Up Military’s Ebolda Funding, John Hudson and Kate Brannen, 2014.
In fiscal year 2014 (FY14) the Defense Information Systems Agency (DISA) bought $8 billion worth of information technology and cyber products and services for the Department of Defense. During the DISA 2014 forecast to industry event, Major General (MG) Alan Lynn, Vice Director and Senior Procurement Executive at DISA, recently outlined his five main objectives with respect to ongoing and future procurement programs:
- Meet small business goals
- Increase competition
- Foster greater discipline in acquisition planning
- Leverage buying power via consolidation of like type items
- Review all procurements exceeding $10 million
MG Lynn explained that these measures will help DISA cope with sequestration, and expected future budget cuts, “…the future is our budget is going to be decreasing. It’s been pretty significant from what we’ve seen so far. What that means is competition is good for us, and we are going to try and compete as much of the contracts as we have coming out as much as possible…we’ve found that if we compete them, then it drives down prices which is good for us.”
Director of the Office of Small Business Programs at DISA, Sharon Jones, announced that DISA has exceeded all of its goals for small businesses within the past three consecutive years. DISA awarded a total of $4.6 billion to small businesses in FY13, and has increased funding toward small business contracts by 2% each year for the past three years. DISA contracts among small businesses were as follows in FY13:
- $523 million awarded to Small Disadvantaged Businesses (SDBs)
- $219 million awarded to Woman Owned Small Businesses (WOSBs)
- $255 million awarded to Service Disabled Veteran Owned Small Businesses (SDVOSBs)
- $85 million awarded to HUBZone small businesses
Jones indicated that DISA intends to increase the total value of contracts awarded to HUBZone small businesses up towards three percent from the current two percent, “We want to work with small business and we want to bring in the best products and services for our warfighters. So in the one area I really want to highlight here, because we really do need to bring in additional companies in this one area to help that endeavor, is those that are HUBZones…We are trying to increase our HUBZone goal. I want to eventually be able to say we can meet the three percent.”
Jones concluded her remarks by stressing the importance for small businesses to choose appropriate teaming partners and to respond to sources sought and RFIs well in advance of industry days.
Related Reading: An Entrepreneur's Guide for Marketing within DISA
- DISA 2014 Forecast to Industry
- MG Alan R. Lynn, DISA Vice Director
- Sharon Jones, Director, Office of Small Business Programs, 2014.
- DISA Launches 5 Cloud Tests, Warns On Industry Consolidation, Sydney J. Freedberg Jr., 2014.
- DISA Conducts Forecast To Industry
The House Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies & the Subcommittee on Research and Technology recently held a joint hearing on the potential re-authorization of the Department of Homeland Security’s (DHS) Science and Technology (S&T) directorate. S&T’s objective is to develop new technologies for agencies under DHS such as the Transportation Security Administration, Coast Guard, Federal Emergency Management Agency, etc. to better protect the homeland from a wide variety of threats. Representatives from both committees were concerned on the level of redundant research programs within S&T’s $1.2 billion budget across DHS; Chairman Lamar Smith highlighted a government accountability office report which described S&T’s R&D management approach as “fragmented and overlapping.”
Undersecretary Brothers responded by providing an overview of S&T’s current R&D priorities, which are guided by the quadrennial homeland security review and the direction of DHS Secretary Johnson:
noninvasive screening, augmenting the resilience of the nation’s cyber infrastructure, empowering decision makers with actionable information, and improving the effectiveness of threat responders. Brothers emphasized the need to balance short term applied research with riskier, but potentially higher reward, long term basic research projects. In recent years, S&T has reduced basic research spending to increase its short term deliverables to end users via applied research projects. In terms of future projects, Undersecretary Brothers indicated he plans to expand S&T’s R&D portfolio to include more commercial off-the-shelf projects to better counter emerging disruptive technologies.
Undersecretary Brothers was confident in the existing channels, such as the Developmental Working Group and the Mission Executive Council, that enable S&T to leverage existing technologies utilized by other government agencies. For example, the developmental working group assists S&T in assimilating relevant Department of Defense (DoD) technology and the mission executive council helps coordinate technical capabilities between the Department of Energy, the Office of the Director of National Intelligence, and the DoD.
Representative Thompson was concerned with S&T’s small business record, and stressed the need for S&T to expand its outreach toward small and/or minority owned businesses going forward. Undersecretary Brothers agreed small businesses were an important potential source of S&T innovation, but expressed concern that many small businesses lack experience working with the federal government. In response to Representative Thompson’s concerns, Undersecretary Brothers indicated he is actively reviewing how S&T interacts with small businesses through standard industry days, and plans to expand S&T’s social media outreach toward small businesses in the future.
For a list of upcoming S&T Events, see the DHS website: http://www.dhs.gov/science-and-technology/st-events
For more information about the S&T Small Business Innovation Research Program (SBIR), please visit the website: http://www.dhs.gov/science-and-technology/sbir
- Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies & Subcommittee on Research and Technology Joint Hearing - Strategy and Mission of the DHS Science and Technology Directorate, 2014.
- Testimony of the Honorable Reginald Brothers Undersecretary for Science and Technology U.S. Department of Homeland Security, 2014.
- Targeted DHS R&D can Help Secure our Borders, Cyber Networks, 2014.
- Statement of Research and Technology Subcommittee Chairman Larry Bucshon (R-Ind.), 2014.
- Statement of Chairman Lamar Smith (R-Texas), 2014.