Cisco Systems Inc., the legendary networking gear maker, is doing again what they've done successfully a decade ago, only better, and in the process sending a message to smaller businesses everywhere.
As reported in the March 8 edition of the Wall Street Journal (http://online.wsj.com/article/SB10001424052748704269004575074181146076528.html?KEYWORDS=cisco+systems), Cisco is moving aggressively to take advantage of the nascent recovery. They saw it coming and they're not waiting for their competitors to see it before they make their move, completing two acquisitions since March 2009 and increasing by 50% the startup businesses they are funding. As a result of this forward thinking, Cisco is expected to come out of this recession stronger than they went in.
As I wrote in our firm's Winter 2008 newsletter, the time to prepare for the recovery is before all your competitors start preparing. When everyone else realizes it's not really the end of the world, you should already be selling world cruises.
Of course that means you have a menu of options ready for your customers, and that sometimes requires investment just when you want to stay in the storm cellar. As Cisco's example readily demonstrates, you have to be operating profitably in the good times to be able to build the reserves needed for a recession, because those reserves not only keep the company together until the storm passes, but they also enable you to be able to stock up on the things you'll need when the storm passes.
If this lesson is lost on you because you didn't have a sufficiently profitable company 3 years ago, now is the time to start the planning process that will ensure that never happens to you again.
As always, I welcome your comments.