Economic Recovery or Not?

March 4, 2010

And so the mystery continues…are we in an economic recovery yet or not? Or, has the very definition of recovery changed (and if so, why)?

“The Shape of Things to Come” posted on March 1 on presents eight leading economists’ perspectives on the shape (quite literally) of an economic recovery. Their views ranged from a “U” to a “W”, with an unsavory “dead-cat bounce” in the mix. Long story short, there doesn’t seem to be much in the way of consensus.

What does this mean for an expansion stage company?

  1. Pay close attention to trends in your industry sector, with your competitors, and with your vendors who sell into your industry peers and competitors. This will usually be more insightful and actionable than currently conflicting macroeconomic indicators.
  2. Invest wisely and cautiously, with a diligent eye on the impact of those investments on your key performance indicators.
  3. Don’t take your eye off trends in your company’s financial indicators and key performance metrics.
  4. Continue to drive efficiencies in your company’s sales and marketing metrics (customer acquisition costs, life-time customer value, renewal rates, etc.). 
  5. Continue to drive best practices process throughout your organization with an eye to increasing efficiencies and positioning your company to scale effectively now and in the future.
  6. Continue to stay laser-focused on execution against your mission, vision, strategy and goals.
  7. Keep an eye on your company’s growth capital requirements, and take advantage of relatively less expensive funding alternatives. These will become more expensive once a recovery (no matter what shape) takes hold.  Don’t miss out on a potential opportunity.

In summary, keep doing what you’ve been doing over the past 18 months to drive your company’s growth. This is probably not the time for radical shifts, or massive expansion strategies.