The crunch is here. We have been seeing headlines in the big media outlets like, “Amazon lays off 10,000” or “Meta has announced an additional cut of 10,000 workers on top of the 11,000 laid off in November.” Thankfully, we haven’t seen numbers that high locally, although we have seen smaller scale workforce reductions in Central Oregon. The uncertainty with regional banks, higher interest rates on top of inflated prices, and continued low labor force participation rates means everyone is on high alert. The crunch is being felt. That said, this is exactly where we can plant seeds that blossom into fruitful returns down the road. A few ways to adapt;
Dive into Complements:
One approach to expanding your business is by adding complementary services. The app store on your smart phone, for example, is a complement to the phone. A movie theater adding in child care services so parents can enjoy a quiet date night is another example. Basically, a complement is anything that adds to your core business and increases the value your customers get by working with you.
Look for Network Effects:
There are three main types of network effect, Direct, Indirect, and Platform. A direct network effect is what happens when more of your product or service benefits the other people – think about phones. One person having a phone isn’t useful. When everyone has a phone, it benefits everyone with a phone.
An indirect network effect is when you can increase the number of available complements as your client base grows, which creates new incentives for more clients. Video game consoles are great examples. The more Xboxes that are sold, the more incentive there is for game designers to make new games, which can further incentive people to buy an Xbox. It’s a virtuous cycle.
A platform is when you can connect both buyers and sellers in a single spot. Think about Lyft connecting riders and drivers. The more riders demanding rides, the more drivers will be attracted to offer rides. The more drivers that are available speeds up the time for a ride, lowers cost, and re-incentivizes customers to choose to use the platform.
Organize your Learning Curve:
A business that can learn and iterate faster than a competing business will be able to more consistently deliver value for their customers. How disparate teams are sharing what has been learned takes a very dedicated effort. Creating a shared Notion Database, “Company Learnings” slack channel or MS Teams page to organize what is working (and what is not) is a great way to ensure everyone is delivering at the highest level possible. Monthly reviews are worth their weight in gold.
Expanding outside of the area:
Lots of us have moved to Central Oregon from somewhere else. That doesn’t mean we have to forget where we came from – think about ways to use your network from previous geographies to expand the area your business serves. Check in with a Chamber of Commerce, former client, alumni association, former professor, friends of your parents, etc.
For a business to survive in Bend, with costs as high as they are, limited labor participation and a limited market size, revenue has to come from multiple places.
Scrappy, driven, creative businesses that find ways to shine in the hard times are the ones that last longest, produce the best returns and offer employees the best long-term possibilities. It’s time to hustle. Get after it.