Every business niche has a cycle and a trend. Everything in life runs in cycles… whether it is fashion (flares), currency values (at this moment the dollar is at a low) or property prices.
The same can be said of your business. When a market starts expanding, it will most likely continue to grow for at least the next five years and vice versa when it starts to decline another five years are due. Do you know what cycle of the trend your business is in?
Bearing this in mind it is important to realise when you enter a market segment what state it is in and how long it has been in that state. Say property prices are booming and you want to invest in property. Chances are that if the prices have risen for over five years then you are in the tail end of the boom and this is not the right time to buy!
Never try and predict a trend but rather latch on when it has started. Far too many people have lost a lot of money trying to guess when one trend ends and another trend begins. Some people have made their fortune this way but for most people who would rather have certainty and reasonable gains this is not the right route to take.
It is also a good idea to have products or services in your armoury that trend at opposite cycles. This makes your business more immune to the cyclical nature of business.
As an easy and simple example if you are car manufacturer and you supply both economy cars and luxury cars then when the trend in the economy is up you will sell higher priced cars and when the economy is faltering you will have a corresponding increase in the number of small models being sold.
It is actually quite staggering how a ten percent reduction in a trend can reduce profits by over fifty percent! Bear in mind that most of your turnover and therefore profits are used to pay for your overheads.
Remember the trend is your friend. By monitoring the cycles carefully you can plan your marketing budget accordingly. You can use the trend to forecast demand and plan ahead for when times are tougher and business is slow. It is possible even to fight the trend by introducing new products at just the right time of the cycle.
What cycle of the trend is your business in?
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