Facebook Leads The Way Through Recession

There’s an old saying that goes: “When the going gets tough, the tough get going” and in most playbooks, recession is considered a tough time. With large portions of the earth’s economy either in recession or teetering on the brink, it’s time for the tough to get going. 

I read recently in BusinessWeek that most of Silicon Valley has listened to the popular wisdom that recession = tough times = must aggressively cut cost in order to survive. The story goes that a venture capital group made a presentation to this effect and soon it was accepted as gospel (read the story for more details). Surprise, surprise, it has become a self-fulfilling prophecy, and probably would have been even if the recession had miraculously evaporated. Why? Because the executives believed it, and when you believe something you take action on that belief. 

Facebook however appears to be cutting against the grain. They’re sticking with their aggressive growth targets, and are viewing the current downturn as a golden opportunity for a land grab. Their biggest competitor, MySpace, is hunkering down and expecting lower revenues this year. That takes them out of the equation, so Facebook is on the hunting trail, eager to snap up anything that will fuel its growth. They’ve even reduced revenue projections in order to take on more new members. They know that sooner or later the tough times will end, and they’re going to be sitting w-a-y ahead of the pack when that happens. 

Where The Rubber Hits The Road

So what does this have to do with you and your business? Everything. If you own a small business, you have an opportunity to be a Facebook right now. Chances are extremely high that your competitors are taking a page out of Silicon Valley’s playbook and hunkering down to weather the storm. 

The question is, are you going to do the same thing? Or are you going exploit the fresh opportunities that will be showing up because your competitors are backing out of areas?

Marketing is a prime example. Right now, your competitors may be pulling ads off the radio for next quarter, or out of the newspaper. Guess what? That makes radio or newspaper or whatever media you’re targeting more ripe for great deals. If business is hurting, time for you to get a good deal! Then with your competitors not even at the ballgame anymore, you’re free to clean up. 

So set aside some time, and consider carefully your current competition, and how they’re changing their strategy. Once you understand theirs, you can formulate yours to beat them. Good luck!

2 Responses to Facebook Leads The Way Through Recession
  1. Deanna Keahey
    December 13, 2008 | 7:28 pm

    I’m a believer in following that Facebook strategy, but it’s sometimes easier said than done. The difficulty comes with the cost of that expansion. When sales and revenues are down, and there’s a credit crisis such that small biz financing is tougher than ever to get, how do you finance that growth? Hunkering down is a lot easier when you don’t have a lot of cash on hand.

    Deanna Keaheys last blog post..Spy vest – Product review video

  2. Jonathan
    December 13, 2008 | 8:17 pm

    That’s an excellent point Deanna. If you have a look at the original article in BusinessWeek you’ll see that Facebook is pulling some strings and changing whatever predictions and expectations they can in order to make growth possible. I guess not every business is going to find itself with resources on hand to do the same thing as Facebook.

    Therefore, in those cases I think it’s important to make the most of non-cash requiring opportunities. Things like joint ventures, partnering with other nearby, non-competitive businesses. Using lower cost but highly effective marketing strategies (like email based marketing for instance instead of direct mail or TV).

    Most businesses can find untold gems right in what they already have, if they dig into it. For instance, truly analyzing and optimizing the lead generation & sales funnels can yield profits, as can taking a closer look at who your customers actually are, segmenting them, and targeting those segments more directly. A great book to read more on this is E-Myth, by Michael Gerber. Highly recommended.

    I guess it’s a bit hard to open a second location at a time like this, though if you can convince the bank to pony up for it…! =)