Wilbur E. Shirley
Richard Montgomery High School
How Greater Washington Companies Can Deal with the Challenging Economy
The Greater Washington area is home to hundreds of thousands of businesses, ranging from family-owned restaurants and mom-and-pop bakeries to gargantuan biotechnology and aerospace firms. Small and large businesses alike benefit from the region’s diverse consumer and client market, highly educated workforce, and federal government foundation. However, at the same time, Greater Washington businesses are affected by national-level economic downturn. In response to recessionary periods, companies must adjust their business model to accommodate changing consumer demands and revenue and expenditure figures. How well a company can accomplish this task is often the deciding factor between long-term success and failure.
So, what can Greater Washington businesses do to stay afloat in the face of challenging economic circumstances? For one, they can take advantage of the resources at their disposal being located in or near the nation’s capital. Greater Washington companies have the benefit of the most educated workforce in the country. In fact, 6 out of the top 8 counties in the country with the highest percentage of people holding a college degree belong to the Greater Washington area.1 This allows companies the flexibility of hiring only the most skilled employees, which consistently translates to greater revenues in the business world—and in today’s economy, every dollar counts.
Secondly, Greater Washington businesses have the advantage of the federal government being located in their backyard. The federal government strengthens the overall regional economy, due to its profusion of spending on defense contracts, research, and equipment. It is hard to exaggerate the effect of the government on the Greater Washington economy. In fact, Greater Washington’s federal procurement is greater than that of the states of California and Florida combined.2 Such spending lessens the burden of economic downturn, stimulating the local economy and helping business. As an example, the CACI corporation based in Arlington, Virginia, has a large number of federal agency clients, including the National Guard, NASA, NIH3, and the Department of State.4 To CEO’s of businesses like CACI, the government is a customer. A government contract is often what it takes to bring a medium- to large-sized company over the top, especially in the current recession.
The third advantage that Greater Washington companies have in responding to the fallout is the rich consumer market that the region provides. The primary challenge that companies face in a recession is lack of consumer demand, which corresponds directly with lack of consumer spending. Companies’ revenue depends on what they are able to sell, whether it is a croissant, a legal service, or communications networking. Companies in and around Washington D.C. have a rich and diverse market to promote their goods and services—which is why good advertising is critical. Good advertising does not necessarily mean spending money to erect billboards on the beltway. Instead, quality advertising refers to targeting the right audience, the right amount. When faced with such a diverse market as in the Greater Washington area, it can either be used to an entrepreneur’s advantage, or be allowed to hurt you. Small server companies do not generally cater to vast technology corporations like General Electric and Lockheed Martin; they would do better to focus their advertising on smaller-scale biotech or law firms. A single family-owned bakery shop might do well to spend very little on advertising, since their customer base is based more on loyalty and preference as opposed to price and trend. While quality advertising can go a long way for some companies, cuts in advertisement spending to reduce expenditures is the right path for others. Being located in Greater Washington provides significant advantages for businesses—maximizing these advantages is key to success in the long run and stability in the current recessionary economy.
Beyond the advantages of their beneficial location, companies in Greater Washington can resort to several more general measures in order to deal with the challenging economy. Naturally, these measures vary depending on the scope of the company and the goods and services that the company provides. For large corporations, employing a sound business model is the single most important aspect of enduring a harsh recession like the one the United States is currently facing, beyond ensuring that this model is effectively carried out. Sound investments are key part of any large-scale business model. Investing does not necessarily mean investing in the stock market; rather, it refers in a broader sense to investment in the future, by purchasing more efficient production machines, changing location, or hiring more efficient employees. For instance, take the Volkswagen Group of America, a company which recently moved its corporate headquarters to Greater Washington.5 The Volkswagen Group is a “future-oriented” company,6 a corporate outlook which supports long-term growth and stability—important goals which are often overlooked by CEO’s and managers in the midst of recession-induced panic. On the other end of the spectrum, poor investments and failure to double-check the quality of their investments are what drove Lehman Brothers into the ground.
In addition to making sound investments, maximizing efficiency is critical for a business to survive, even thrive, in challenging economic times. In the business world, efficiency means producing the most with a given amount of input. “Input” is in the economic sense—everything that goes into making a final product—raw resources, production or capital resources, employees, even the entrepreneur who devises the production plan. The fact of the matter is that, in a recession, worker lay-offs are often the only way to achieve maximum efficiency. Greater Washington companies have the advantage of picking from a select stock of highly educated workers. They have the flexibility of employing only those with the highest skill set, thereby maximizing efficiency. Additionally, entrepreneurs are charged with the responsibility of making sure that the raw and production resources with the highest quality-cost-efficiency are used. By maximizing efficiency, businesses give themselves the best shot at flourishing despite the tough economy.
In today’s slow economy, the focus of small businesses must differ from that of large businesses. While large businesses should focus on a general business plan, small businesses benefit more from attention to detail—the smaller a company’s scope, the more magnified detail becomes. For example, high employee morale is often overlooked as a simple way to increase output. Additionally, small businesses have the advantage of being able to provide superior customer service. Good customer service engenders customer loyalty, which is extremely beneficial in an economy where a business’s primary concern is a shortage of customers.
The entrepreneur is in many ways like a marathon runner. In order to be successful, both must have a vision for the long-term future, and simultaneously accommodate short-term goals. As a marathon runner must climb a steep hill, so the entrepreneur must manage his business in an undesirable economic climate. What both must understand is that present circumstances inevitably change—tough times today will undoubtedly yield to a brighter situation tomorrow. Perseverance, resourcefulness, and aptitude are the qualities which ultimately turn entrepreneurs into successful businessmen. Greater Washington companies must understand this in order to thrive in the challenging economy. But to succeed in the long run, they must also build and plan for the future, like the marathon runner who envisions himself the first to cross the finish line.
- Greater Washington 2009 Regional Report. Economic Development, Greater Washington Initiative. Washington DC, 2009. 7. Retrieved 28 Sept. 2009. http://www.greaterwashington.org/pdf/RR_2009.pdf.
- Greater Washington 2009 Regional Report. 12.
- CACI Strategic Communications. Meet Some of Our Clients. Retrieved 28 Sept. 2009. http://www.caci.com/csc/clients.shtml.
- CACI International Inc. “CACI Awarded $29 Million Information Technology Task Order With U.S. State Department's Bureau of Diplomatic Security.” Press release. 12 Feb. 2008. Retrieved 28 Sept. 2009. http://www.caci.com/about/news/news2008/12_02_08_NR.html.
- Greater Washington 2009 Regional Report. 6.
- Volkswagen Group of America. About the Company. 2008. Retrieved 28 Sept. 2009. http://www.volkswagengroupamerica.com/company/index.htm