Everything in this blog post is covered in Richard Maybury’s book about BCM. It also contains a more in depth look what i have covered here. Link: The Clipper Ship Strategy
Do you want to know how to keep your business alive during a recession? You can use BCM to save your business. You will learn how to use BCM (known as Business Cycle Management) in this blog post which talks about cones, which is very important in sales, then you learn about production, which is less important than sales and some tips about sales. Last we show you how it all comes together in an example. What you will learn in this blog post will help you a lot if you do it right.
In BCM sales is the most important thing and a lot of it is centered around cones. We will discuss cones right now.
What are cones? When the government prints money it goes into certain areas. Those areas become hot spots also known as cones, because there is more money, which leads to profit and other people are lured in to the industry, because of the profits.
Different types of cones. The different types of cones, are Deliberate cone (DC), Accidental cone hollow and Accidental cone filled. A Deliberate cone is when the government prints money in to certain areas in the economy. Accidental cone filled is when people think a cone will develop and move in before it has a flow of money. In this case a flow of money develops. The only difference between ACF (Accidental cone filled) and ACH (Accidental cone hollow) is that in ACH a flow of money doesn’t develop and after a while the businesses inside the ACH go bankrupt.
How to identify cones. There are two ways you can identify cones. One is using websites, like NTIS, FRED, Information Usa and Census Bureau. The second option is to get a reference librarian. By that I do not mean the guy who checks your books in and out at the library. I mean a person who you can ask where cones are.
An example of a accidental cone is the roaring twenties stock market cone. In the twenties the government poured money into the economy and back the the stock market was fashionable. That’s were the money went, in the 1929 the government tightened the money supply and the accidental cone collapsed overnight.
Now that we covered the cones we will talk about production and a few useful tips in sales.
Production. Production is also very important, but it is less important than sales. When people used to start up businesses they bought their equipment, plant and labor. Nowadays, since the economy is corrupt and unstable it is very risky to buy plant, equipment or labor. Instead you should rent it. The money you have left should be used on sales.
You know how to identify were cones are and which type the cones are, but you don’t know if your customers are inside or outside those cones. There are a few ways you can do this. One of them is to start a conversation and ask how they make a living. This is pretty effective, since most people like to talk about their job. Another way is to have a special week for people in certain jobs. This special thing could include a discount on your service or items. The way it works is they fill out a piece of paper where they have to put in their name, address and ID number. The last way is to have a contest to have a sign that says the people have to put in their business card and at the end of the week they draw a random card and the winner gets your service or item for free or for discount. After you’ve tried the methods above at least once put the names and addresses in your computer and classify them.
Now that you know what types of cones your customers are in you’re ready to learn what to do in a boom and a bust. During a boom you should sell to DC’s and AC’s. During a recession (recession is same as a bust) you should only sell to DC’s to stop yourself from becoming a ACH. Another thing thing you can do during recession is to buy out your competitors who went bankrupt by spending in booms and not being able to pay it back in recessions, because their willing to sell it for a low price. Then in the next boom sell them to somebody else for a high price.
This is a example of how to find out what type of cones your customers are in. For example you own a doughnut shop and you setup a special week for Construction workers. Where they fill out a piece of paper with their name, address and ID number. Every person who fills out the piece of paper gets a dozen of free doughnuts. Now you know what cones your customers who are construction workers are in. You put the names and addresses in your computer and classify them.
Now that you know how sales and production works in BCM. We will see how it works in action in this example.
For example you were manager of a copper mine in Colorado, but it was closed in 1983, because of the 1980 and 1982 recessions. It is 1985 and you’re out of work for two years. You’re in your kitchen when you invent a new kind of cereal, which you call Yummy Gobblies. In BCM instead of starting with production start instead with sales. You find a healthy cone, in 1985 Sacramento would work. Then you research it until you know everything about it. You should find the hot spots, the places with the highest per capita income, low unemployment and if possible where a lot of people are DC’s.
Then when you know all this. If the cone is good write the Sacramento phone company and ask for a Sacramento phone book. Then you phone all the Sacramento food stores in the hot spots and make a appointment to meet with the buyers. When it’s time to leave make product samples and drive to Sacramento and get orders from the buyers.
Now you start producing Yummy Gobblies. Instead of buying the factory and the production equipment, you show the owners the orders and tell them to produce the cereal. Now you arrange a trucking company, instead of buying trucks to deliver the raw materials to the factory and bring the cereal from the factory to the food stores. To get a demand for your cereal send coupons to people living in the hot spots. Do this by contacting list brokers and ask them for government employees living in the hot spots. Then send coupons to those people.
To summarize on how to use Business cycle management. The first thing you should know is what cones are, how to identify them and what types of cones exist. The next thing you should know is production and more about sales. Now you know how it works and we show you how it plays out in a example.