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What are you all doing to prepare for the impending US recession?


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#1
Derek Tonn

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I'm sure this sounds a little "doom and gloom." However, I see NO chance of the United States economy avoiding a recession that will be at least as prominent as the post-9/11 recession of 2002...as the hundreds of billions of dollars in housing foreclosures is going to have a MUCH more severe impact on the American economy than anything Al Qaeda might be able to dream-up (sans a dirty bomb). :(

I remember in 2002, my phone effectively stopped ringing for 4-6 months. We were about 1/30th our size back then compared to the size we are now, so times got hard....REALLY hard! The first thing I did to make sure I didn't put that amount of financial stress on my family EVER again after 2002 was to create a "plan for an economy in recession"...though this coming spring/summer will be the first time I have had to formally implement it.

Basically the "eureka" moment for me after 2002 was to realize that the concept of target marketing needed to be a sort of "shock absorber" rather than a fixed point in space or on a chart. When the economy is booming, target a disproportionally large amount of marketing dollars/attention to non-profits and smaller organizations who might otherwise not be able to afford custom cartographic projects. When the economy slips, target a disproportionally large amount of marketing dollars/attention on the high-end corporations and organizations who are accustomed to shelling-out WAY too much money to architects and advertising agencies for the type of work many of us produce, then come in as a low(er) cost leader and snatch-up lots of those hotel/resort/corporate clients from the organizations who've been getting fat off of incredible margins for comparable to inferior product.

I'm wondering what all of you are planning to do over the next 6-12+ months...at least those of you who are dependent upon American clients for your freelance and/or custom cartography paychecks. If 2008-2009 is similar to 2001-2002, probably about 8-10 smaller members of the custom cartography business in North America will be driven under in the months ahead. That, and a bit more merger and acquisition activity will likely occur in our industry. I'd just hate to see other small custom cartography shops at CartoTalk go under...so I thought I would start a thread in here and see if we cannot all talk about how we plan to weather the impending storm that is about to hit our shores...

Thanks for listening!

Derek
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mapformation, LLC

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#2
Hans van der Maarel

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The recession is also going to hit us, supposedly. I haven't really noticed anything, been getting busier and busier :P

I've already added software sales to my range of offerings last year, in order to diversify somewhat. The other step would be to come up with something brand new that I can produce and then sell (a map, a book) Other than that, the only thing I can do (or think I can do) is take it as it comes. Obviously, if the $ drops, it's going to be more difficult for me to sell my services in the US, but on the other hand purchasing from and outsourcing to the US would become cheaper (which in turn will help the US economy get back on its feet).
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#3
MapMedia

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I really appreciate the Business of Cartography category. As for the question, I think one important step for any business to take now, in light of 'recession talk' is to curb spending (hold off on new plotter until absolutely necessary, travel only when client subsidizes, etc.).

Not sure how this recession will unfold, but it will likely effect all in some way, but be different from 2002 recession. Certain sectors will be hit the hardest. For my publisher clients, if book sales drop, certain projects will be put on hold. I do have a few Euro clients, so its good to diversity.

#4
James Hines

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The main thing to know to keep your head above water is good fiscal management, if you want it enough you will survive, if not there's always minimum wage. But it's a bit of a concern for new freelancers seeking to get their foot in the door. What happens in the United States effects the Canadian economy. If your new or trying to get into freelancing ride the wave because you may have to work for someone else you may or may not like :( . In the meantime tap the market, produce your own maps, & sell them.

"There is much beauty that we fail to see through our own eyes teeming with life forms that give us that perception of our reality.  Leaves on the trees blowing gently in the wind, or scarily, the waves pounding through high surf, or lightly on a warm summer’s day; that opportunity to sit or swim in the water on a white beach.   That comfort to shout, “The universal conscious do you hear me?  I am alive, guide me dear logos towards the path of rightnesses.”  Earned what has been kept, no longer to be absorbed into a life filled with cold damn winds and  that stubborn fog clouding  my vision with nothing but darkness."


#5
Derek Tonn

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...I think one important step for any business to take now, in light of 'recession talk' is to curb spending (hold off on new plotter until absolutely necessary, travel only when client subsidizes, etc.).


I know it is HIGHLY counter-intuitive, but on the issue of "curbing spending" during a recession, I honestly only believe that to be partially true.

One of the great "secrets" to mapformation's success during the past decade has been the fact that during the 2002 recession in the United States, when most of our direct competitors shrunk their marketing budgets down to nothing while no money was coming in, we TRIPLED ours! The theory/idea was that while nobody was hiring "now," the recession would inevitably pass and if we were one of the only firms who was promoting themselves and "fresh on people's minds," we would likely capture a great deal of market share as a result. It was a definite gamble, but it did pay off.

It's like the stock market. The time to buy is NOT when the market is strong and everybody else is buying. No, the time to BUY is when the economy is weak and you are buying shares at $0.70-$0.75 on the dollar. Zig when others zag. Spend when others save. Save while others are spending maybe a bit too lavishly. Etc.

I agree that if that new plotter can wait, don't buy it just yet. However, if one stopped marketing themselves during a recessionary period, that can and will do severe long-term damage to a company...at least from the perspective of market share and the recruitment of new clients. With the recession looming, I might wait on that new laptop until 2009...but related to marketing and sales, it'll be all-systems GO for the indefinite future! B)

Derek
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mapformation, LLC

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#6
merft

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We've been watching quite a few of our client sectors and have actually started weaning off some clients and expanding into specific sectors. There are a couple reasons but regardless of the recession, these markets will not be affected. For me it was getting out of the "we have extra cash and wouldn't it be nice" clients (which can be fun interesting projects with low profit margins but chasing down A/R can be a pain) into "it has to be done, money is not object" clients (not typically as fun but decent profit margins and A/R is not a problem). Can't say I do as many pretty maps as I used to, but I am secure in my job and have a good backlog of projects. -Tom

#7
ELeFevre

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I agree with Derek. If you make drastic changes to your overall strategy in response to a downturn in the marketplace you risk jeopardizing your long-term position, just like in the stock market. After all, your competitors and customers face the same market you do. IMO downturns serve as a wake up call that says it’s past-time to reevaluate how we operate, where we are wasting time, money, et cetera. If anything it’s a good time to sharpen your talons and tighten the screws on what you do best.

On the flip-side, if the market totally collapses, there's always.....THUNDERBIRD. :)


Tom,
A couple of days ago we had a couple of DDS calendar posters on one of our tables in the map room...the cartoon "GIS" poster. Excellent idea. Did you create it? You should post it so everyone knows what I'm talking about. It's great.



#8
MapMedia

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Right, Tom. Shifting clientèle a notch for some can be a smart market move. I've done this over the summer, with some well spent marketing funds, and now have a few wonderful clients in a new sector that, while the projects aren't map atlas work, they are a possible bread-butter item.

While I don't advocate de-facto reducing marketing during recessions, being more creative and flexible are important virtues.

#9
Casey Greene

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Not to make light of the situation, but if you guys are going through hard times, think of my situation: I wish I was in your boat, and had a cartography job to worry about. ;)

Casey Greene
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#10
Derek Tonn

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Thought this thread was worth a bump. Now that we obviously all see/feel the impacts of this current recession (even worse than I thought it would be, and I thought it would be a BAD one), I'm just wondering what people did and are now doing in the midst of this severe downturn in the global economy?

At mapformation, we've essentially:

1. Reallocated some of our marketing dollars into areas where we know we're going to get the most bang for our buck. Our web site, our spin-off venture (GraphicsOptimization), and strengthening our relationships with our partners.

2. Shifting our target marketing efforts. We're focusing more time/resources on targeting the upscale segments who are used to hiring ad agencies or architects at 50-100% higher prices at the moment...trying to offer them comparable/superior quality of service at a marked discount in what they are accustomed to paying. Most of our non-profit and small for-profit clients are reluctant to spend money right now (I don't blame them)...so whenever the economy takes a down-turn, we tend to go after folks who are used to paying WAY too much for the type of work we do. ;)

3. Work on merger and acquisition activity. It's the tried and true "strength in numbers" philosophy. Why have multiple web sites, legal/tax filings, etc. when only one will do? We're close to adding another small firm to our "umbrella" of designers...and will likely pursue 2-3 more if the right match of opportunity, portfolio and personality presents itself.

4. Discussing the potential for adding some sales help. Both for now (keeping designers busy) AND for later (increasing market share).

We're doing okay, but I think it's going to be a LONG 2009. We're in pretty good shape for it, I think. However, what we do in the coming 3-6+ months will determine where we are come 2011-2012. Hopefully bigger, stronger, and MUCH more international in our clientele...but we'll see.

What are you all doing to weather the economic storm?
Derek Tonn
Founder and CEO
mapformation, LLC

datonn@mapformation.com
http://www.mapformation.com

#11
frax

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He he, I am not doing the most logical thing - quitting my day job and starting up my own business (since Nov 1st)... I am not overly worried though, the outlook (for me) is pretty decent. Worth noting - I think - is that cash is drying up more if you are targeting consumers and big business, the downturn is not (yet) hitting the academic, government, other research and development work as bad. Yet, at least.

Even though the current recession is worse and deeper than ever before, and wider in scope - it is the first real global financial downturn, I think it will pick up sooner than we think. Just my gut feeling - the world picked up fast when the it/telecoms bubble burst, as well as after 9/11 (both were predicted to lead into long recession). Maybe the US took the lead into the recession (with the housing market and the financial/lending crisis) - but I have feeling that India or China will take the lead out of it. The taste of western consumerism and lifestyle has been planted and is unstoppable in force...
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#12
MapMedia

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stockpiling maps is probably a good idea too.

#13
Matthew Hampton

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It might be nearly time to head to washington for a bailout...

co-cartographic creator of boringmaps.com


#14
Derek Tonn

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Yep....getting to be about that time for a bail-out.... ;)

I'm serious though when I mention "strength in numbers." We've grown nearly 30-fold since we decided to go from being a vector-only shop to adding raster, hand-rendered, cartoon-style illustrations, SketchUp, cell phone-enabled mapping, etc. We didn't reinvent the wheel in any of those instances either! We just brought people aboard who already had the expertise and track record, then promoted the HECK out of what they were doing so that they could go back to focusing on why they started their own shops in the first place: to do design work (and not sales, admin, finance, legal, etc.).

We (mapformation) have toyed with the idea of adding GIS/CAD services to our family of offerings for YEARS! We've never pulled the trigger though because we haven't quite found the right "match" between talent, pre-existing portfolio/clients and preferences (people who wanted to just do the work and not worry about SELLING their services). With a recession now in full swing though, we'll see if that might be something that is in store for us in 2009. Again though, we'll only do it if we have the right people/person to make it happen...as we would never want to purposefully reinvent the wheel.

One of our clients who decided to pay their bill a full TWO MONTHS after it was due finally paid the piper today. It's not the volume of work that has hurt during the recession as much as it has been convincing clients to pay their bills on-time (cashflows). At least in our shop. We've managed to stay fairly busy, but getting people to pay on-time lately has been another story. <_<
Derek Tonn
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#15
TanyaJ

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He he, I am not doing the most logical thing - quitting my day job and starting up my own business (since Nov 1st)... I am not overly worried though, the outlook (for me) is pretty decent. Worth noting - I think - is that cash is drying up more if you are targeting consumers and big business, the downturn is not (yet) hitting the academic, government, other research and development work as bad. Yet, at least.

Even though the current recession is worse and deeper than ever before, and wider in scope - it is the first real global financial downturn, I think it will pick up sooner than we think. Just my gut feeling - the world picked up fast when the it/telecoms bubble burst, as well as after 9/11 (both were predicted to lead into long recession). Maybe the US took the lead into the recession (with the housing market and the financial/lending crisis) - but I have feeling that India or China will take the lead out of it. The taste of western consumerism and lifestyle has been planted and is unstoppable in force...

I'm so jealous! I would love to get done my 'day job'! It used to be a part-time job (24 hrs a week) until 12/01/08. All part-time positions got red-flagged, so I was told go full-time or get done. I didn't/don't have the clientele...
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