I spent some time with Victor Cheng, a San Francisco based business coach, and author of the Recession Proof Business: Lessons from the Greatest Recession Success Stories of All Time. It was an interesting conversation.

Tom:
As we make this slow turn from recession to recovery, what are the biggest mistakes companies make attempting to re-engage their old markets, the ones, by necessity, they have contracted away from?

Victor:
This big mistake is assuming that what used to work pre-recession will work post-recession. The magnitude, severity, and duration of this recession has been significant. It’s my view that the contraction was not merely a correction to an otherwise robust growth trajectory, but rather a structural shift in demand.

The problem with structural shifts in demand is they tend to have far reaching cascade effects that are difficult to spot in advance, and only obvious in hindsight. If a company’s clients have gone away, it’s not a given they may come back. If one product line is no longer relevant in this new economy, it’s quite possible a different product line is now more relevant.

One has to be looking qualitatively and quantitatively for these shifts. The early “clues” that reveal these trends are often either passing remarks clients make about their situation, that foreshadow shifts in spending or unusual shifts in revenue mix across products, services, or customer segments.

It is difficult to reliably extrapolate these small early signs to find the longer term trend, but those who are willing to tolerate getting it wrong sometimes, will have a major first mover advantage to capitalizing on how a re-structured customer demand is expressing itself in the new economy.

You can download a free e-copy of Victor’s book, The Recession-Proof Business. Our conversation continues tomorrow.