I attended a presentation by Dr. Stephen Lerch, the Executive Director of the Washington Economic & Revenue Forecast Council ( https://erfc.wa.gov/about/staff-members/stephen-lerch-phd) earlier this month to get an overview of the anticipated economic conditions in the state of Washington in 2023. Dr. Lerch agreed with the 64% of economists who believe that a recession will occur in the United States in 2023 (https://www.bankrate.com/banking/federal-reserve/economic-indicator-survey-recession-risks-january-2023/). He also forecast that the recession will likely be mild and less adverse in Washington than the rest of the nation due to the corporate economic engines that are anticipated to stabilize employment and real estate values in the state.
As the President & CEO of the oldest business brokerage firm in the Pacific Northwest, a position that I have held since 2000 through multiple recessionary economic cycles, I am often asked by entrepreneurs for my opinion on the best way to prepare for a recession as a business owner. My answer is that you cannot compete for customers on price and provide a commodity. You need to compete on knowledge, experience, ability, and customer service. It is also in your best interest to create a consumer experience that your customers want to repeat.
This concept was conveyed well in the book, The Experience Economy, by B. Joseph Pine & James H Gilmore (https://www.amazon.com/Experience-Economy-New-Preface-Authors/dp/1633697975/). This video provides a good overview of the topic covered (https://www.youtube.com/watch?v=TOjUxGqh7aA).
Think about the restaurants, stores, and service providers you elect to frequent. Is it because of what they will provide you, or for something more? As a business brokerage firm that has successfully sold over 4200 privately held companies and family businesses since 1975, we have witnessed superior, average, and poor customer experiences. The coffee space is crowded in Seattle. Yet, the Java Bean (https://www.tripadvisor.com/Restaurant_Review-g60878-d4543743-Reviews-Java_Bean_Ballard-Seattle_Washington.html) with their locations in Ballard & West Seattle developed a loyal customer base prior to us selling it for founder Tony Hoyt. There are few commodities less exciting than carpet. Yet, Vogel Carpet (https://www.vogelscarpet.com/) in Seattle has flourished for many years, including in a transition of ownership that recently resulted in the company expanding to another location in Kent. Plants can be purchased everywhere from Fred Meyers to Home Depot, but Gillian Matthews (https://ibainc.com/blog/nesha-ruther/the-story-of-gillian-mathews-ravenna-gardens/) created an iconic store at Ravenna Gardens (https://www.ravennagardens.com/) that has blossomed in the University Village retail garden for many years prior to passing the ownership torch to a trusted employee with IBA’s assistance. Sporting goods can be purchased easily online or at any number of big box retailers, yet Rick Bauman (https://ibainc.com/blog/nesha-ruther/the-story-of-rick-bauman-play-it-again-sports/) established himself as a destination athletic retailer (https://www.playitagainsports.com/locations/woodinville-wa) on the Eastside prior to retiring in 2022. Backpacks and business attaches can be purchased at value propositions online, at big box retailers, outlet malls, and office supply and bookstores. However, past IBA client, Tom Bihn, created an iconic brand ( https://www.tombihn.com/) of domestically manufactured, high quality, innovative products in the space that resulted in a loyal community of customers purchasing products at premium prices and a robust secondary market for the brand.
These are just a few of the businesses IBA has sold where ownership recognized the value of selling an experience and created a tribe of consumer advocates for their company. It is strongly encouraged that entrepreneurs follow this business model, especially heading into an economy where purchases are more cautious and scrutinized.
Austerity measures may be necessary in some business models in 2023 to weather the storm clouds and rain likely on the horizon economically. We are already seeing layoffs in the technology sector ( https://www.kiro7.com/news/local/local-tech-layoffs-nearing-levels-2008-recession/VUC7N3H4IZEDND63OH3ZD46AFM/). However, I caution against actions that impact customer experience. As an example, I recall a company I sold in the 1990’s in the travel sector, that went from nearly eight figures in revenue to low seven figures because customers and employees left in numbers when the implementation of an automated phone system inside a company known for superior customer service had people violently complaining about pushing an extension to get trusted advisors and finding voicemail rather than being routed by a welcoming receptionist with a smile in their voice and an explanation if the desired party was not immediately available. It should also never be forgotten that if as a business owner you meet or exceed expectations, that most customers will likely not say a word, but return to shop another day. However, negative experiences are frequently shared with family, friends, and potentially online in abundance.
Finally, in closing as the owner of IBA, I welcome good and bad feedback on our professional services and the experience working with my company. As a firm, we strive to provide market leading knowledge, experience, ability, and customer service to the parties and their advisors in the transactions we facilitate as a business brokerage firm. Telephone calls are welcome at our corporate headquarters at (425) 454-3052 or correspondence by email at firstname.lastname@example.org.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, and accounting communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.