If we are not already deep into it, our economy is most definitely in a recession. Like many business owners you are now in protection mode, or as they say in football, the prevent defense. This is smart and always necessary, especially with all the inflationary pressures going on. However, if you’re like my beloved Cleveland Browns, you’re not playing to win, but playing not to lose.
Let’s break this down a bit and see which play is best for your screening company.
Here are the facts. Historically in a recession, especially in the #backgroundscreening industry, when companies don’t hire as much, we don’t do as many background checks. This has always been true, it always will be true……we are simply part of the hiring ecosystem. The art in this is how we react as operators and business owners.
Play not to lose: We cut our staff, we have a keen eye on cash and our balance sheet and we look at all the ways we can save money and increase margins. There is nothing wrong with this, in fact I could argue that this is what you should do in any scenario. However, don’t do this to your own detriment. Make the right adjustments in the right places. Firms that decide to make cuts in the wrong places, Account Management, Sales & Marketing, and Product will not reap the benefits of growth during this phase. If you wait it out and make cuts in the wrong places you are at risk of losing clients, not adding new clients and are a slave to your own operation.
Play to win: Here is where the art if capital comes in. Well capitalized screening firms and/or firms with access to capital, such as those that are private equity backed, will invest in their future. As I’ve mentioned before, in 2008, during one of the greatest economic downturns in our nation's history, well run firms such as Sterling rose to the occasion. This is the time to make smart acquisitions, beef up your sales teams, find new ways to market, even outside of our existing market and most importantly, find new products to sell to your customers. As my partner Les used to say, business is war, you need an offense and a defense.
Even today, we see the publicly traded screening firms, or at least some of them, saying they will continue to make acquisitions BUT they will be the right value for the right price. Multiples are falling and we are quickly flipping from a sellers market to a buyers market. Use this information to your advantage!
Yes, I filled this blog with as many cliches as I could for two reasons. One, trying to call my inner Kevin Bachman, where he uses cliches and sports analogies in every other sentence. Two, I recently had an article published in Spin Magazine. One of the coolest stories I’ve ever heard about 9/11 is now memorialized in a major magazine…..and the editor cut every single cliché I had. So now you get the double benefit. This was also a shameless plug for you to read it, if you already haven’t.
How can we help? Let’s chat. There is no one size fits all solution for any of you, but we can help you with a strategy. Whether it’s buying a company, selling yours, or adding key talent, we can help.
What would Jason the business owner do here? Well, that depends on our capital position, but in a perfect world, I’m playing to win, period.
Best,
Jason
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