Navigating Challenging Market Conditions, Thoughts for Analysts

Date Published: June 11, 2019
Having issues navigating challenging market conditions that your coverage sectors are experiencing?
Inevitably markets slow, companies fail, conditions become challenging, industries contract and the firms who cover them from an analyst perspective are going to take a hit. Count on it. Should be common sense, right? Yet, I am still amazed when professional services firms act surprised when industry slowdowns hit their bottom line. It’s as if they didn’t see the slowdown coming or naively assumed that their markets will go on buying their products and services regardless of what’s happening.
These firms do get paid to advise others on future conditions, no? Provide advice for succeeding in markets? Accounting for potential scenarios?

Take our advice, we aren’t using it

It’s a common tendency for analysts to see growth in every forecast they publish. They do, after all, earn their money in syndicated reports telling everyone else that they see positives, at least somewhere since bad news doesn’t pay the bills. Maybe it’s hard for them to come off that tack? Maybe they buy into their own or the industry’s hype generation. Or perhaps simply don’t know when and how to shift when they need to?
I get it, regardless of current conditions companies have to generate revenue and billable time. They can either try and operate through the tough times with some intelligent and proactive practice management and strategies or they can founder along with a business model that doesn’t reflect what their coverage markets are experiencing. If you are a competent analyst, then you should have the pulse of your market and know far enough in advance to get ahead of the wave. Your success in navigating challenging market conditions will determine your fate.
I think it is fair to present the following questions.
Just how healthy is your market? Is growth still happening? Is it stalling or in contraction? How long is this to continue?
At what stage are your clients in their industry participation? Investing now? Heavily invested? Peripheral? Passing curiosity?
What phase is the sector in? Is it emerging? Established with healthy growth? Legacy?
And based on the stage, what are its actual core information, forecasting and analysis needs? Do they really need frequent data updates? Quarterly? Yearly? 18 months? Do they need more qualitative? More account specific?
What is your messaging to market? Are you still selling a growth story when your clients are seeing resistance? Are you providing sound guidance on how the sector will pass though whatever phase it is experiencing?
And when is the last time you did a product assessment? This will be the subject of another post but in short, the products you made money on the past few years won’t be the ones you will need to rely on in the future. Knowing the condition of your market will at least form the basis for some reasonable self-assessment.