April2009 Archive

Current State of Business

2009 Apr 19   category: Business Devt   author:  

The ideas outlined in this post are prompted by commonly heard question these days: “How is your business weathering the current economic downturn?”. The first thing to state definitively is that FlagAndMap is not in danger of going out of business. FlagAndMap is still in an early development stage where growth is more important than profitability and modest long term investment ensures that the business does not encounter cash flow problems. For us the question is really about the impact of the current economic conditions on our rate of growth.

In fact, we have seen growth remain steady over the last six months, when correcting for year-end seasonal effects. Our stretch goal is for the number of customers and our revenue to grow by 50% year on year. In broad terms we are still achieving this despite the economic gloom.

In fact for an enterprise like ours it would probably be a mistake to use a recession as an excuse to relax growth goals. Companies in an early stage of growth are either riding the wave of an emerging market or, like us, trying to break into an established market by capturing market share. In the latter case unless the market has been catastrophically affected by the downturn (think car industry) the growth of a newer company based on market share capture should not be severely hampered. It may even be helped. Established players may be suffering – cutting costs to remain profitable, shedding resources due to overcapacity and struggling with cash flow issues. Newer ventures on the other hand may have none of these challenges – they are not currently expecting to be profitable, capacity has probably always lagged demand and long term investment for growth ensures that cash is on hand.

Of course FlagAndMap is a modest enterprise in comparison with some but the above considerations should be equally valid. We are therefore not intending to use the current recession as an excuse to relax our goals. Fortunately, so far this year we are not failing to achieve them and who knows, perhaps as the economy emerges from recession we may enjoy an unplanned boost.