Here is the million dollar question: “What can Albertans and the oil and gas sector expect in 2016?”
Some people have access to more data, but unless you’ve invented the time machine, your guess about the future might be just as good as theirs.
The Future Is Gloomy
(Update: Since this article was originally published in December 2015, the price of oil has dropped below $30 US per barrel and the royalty review results have been announced. Those events make the rest of the article more relevant than ever.)
I was just reading that oil prices dropped below $37 per barrel. We have a carbon tax coming in 2018, along with caps on the oil sands, and there is a royalty review pending as well. We still really don’t know what is happening at the federal level either.
In one analysis, the global manufacturing numbers are slipping, which indicates a global recession and decreased demand. In another analysis, oil prices are going down to $20 per barrel. Others are saying $30. It also might go back to $60 later in the year.
This is certainly not business as usual for Alberta. The only thing I know for certain is no one knows for certain. What if something good happens?
When Opportunity Knocks
It is extremely important to deal with the current situation and survive. It is important to plan for the negative scenarios.
We’ve been in business for over 15 years. We’ve been through some rough cycles. We’ve had some close calls. We are currently seeing harder times as well, and many local businesses we are going in to work with are struggling.
What I’ve learned is you still need to plan for success.
Keep Success In Mind
Knowing why you are doing what you are doing can help you get through the rough patches.
Just as importantly, holding your vision of success allows you to see opportunities you might miss with a different mindset. You should start to look for ways to succeed rather than ways to avoid failure.
Some companies are actively pursuing mergers and acquisitions. They are acquiring the potential to grow a lot faster in the future, expanding their offerings, and removing competitors.
Your best strategy might be different. The point is to have one.
Your Brand Is Everything
I was talking to a couple of executives the other day, and I was curious about what they think about the drive for low cost right now. They were both emphatic about the need to focus on value rather than price. They’ve seen far too many cases where low prices meant low values. Poor quality or delivery impacts other areas of the projects, and the overall costs go up.
Your brand is NOT the company logo on golf shirts, hats, and coffee mugs. Your brand is what your prospects and clients think and say your value proposition is.
Are you communicating, living, and breathing your value proposition on a daily basis? That is the only way to move from newcomer to trusted vendor. Someone else will falter or fail and give you an opportunity based on relationship, trust, and the ability to deliver on your value. A strong brand reduces perceived risk.
Someone can always be a little cheaper. Competing on value instead of price is almost always a better position to be in.
Planning For Success
You have a vision and have built a solid brand. When an upturn in the economy comes, or you hit on another opportunity, can you execute on it? Can you double or triple your size in a few months? What about 10x in a year? Can you grow rapidly without running out of cash or damaging your brand reputation?
That is the real trick and where so many businesses struggle to grow.
To be ready, you have to have a solid core. This is something you should be working on all the time and includes:
- Your leadership team
- Experienced, capable, & trusted key employees
- Systems and processes that support growth
- A strong culture of performance and excellence
- An on boarding and training program.
Then you need a growth plan that specifies at a high level how you will add capacity across all areas of delivery, marketing, and sales.
Don’t forget the financial model. When your revenue is growing rapidly, running out of money is not something you want to experience. Success is within your grasp, but instead, you are left with failure if this problem occurs.
I always tell people a plan does not mean every detail right now. A plan is a guide that can be filled in and modified as you go. Stay lean and agile in your planning where possible.
Marketing And Innovation
“Business has only two functions — marketing and innovation.” ~Peter F. Drucker
Essentially, marketing is everything from your brand to your sales. If you don’t have sales, you don’t have a business.
Innovation is everything you do to add value to your clients. If you don’t constantly innovate and improve, at least some your competitors will, and you won’t have sales.
Get these things right, and 2016 might end up much better than forecasted. At least you will be ready either way.
Article originally published in the December 2015 issue of the Oilfield Pulse.