Recovered Industry

Looking at the recent headlines I would say that part of the Gift/Décor industry is roaring back to robust financial health.

- Gibson parent declares dividend
- Peter Pauper Press launches UK Division
- Midwest parent declares dividend
- Yankee Candle Gains...
- Brandwise makes Inc 500 list
- Global Sources revenue rise 29%

It sounds great but I think is more of the bifurcation I talked about last time. Strong companies are getting stronger, weak are dying off and the average performers are becoming increasingly rare.

So as a CEO what do you do with this information?

If you are a strong company, congratulations. Take a bonus and spread the wealth to your loyal (and beleaguered) employees who are likely doing a whole lot more work per person than they were 3 years ago. It's also time to shop around for your financing needs. lenders are tripping all over themselves to loan money to companies like yours. Suppliers will extend terms if you've remained a prompt payer through the years. Now is also the time to lock in pricing where you can if you believe, as I do, that commodities will continue to rise through 2011.

If you are a challenged company just barely holding on think about what your strong competition is about to get. They'll get better employees, better terms and better pricing. You'll get to make a choice because it is make-or-break time. There is always a way out but most distressed CEO's only grip the wheel tighter as their car accelerates towards the cliff-edge. I'm sure that I've carried on at length previously about this denial.

If you are CEO of a company hanging on to average results after this brutal recession, congratulations. Congratulations on surviving with just enough energy to catch the rising wave of recovery. While our economy used to be run on average results, I think things have changed and average companies will become increasingly rare (for the next 5-10 years). These companies will become peak performers or be broken up and sold off.

So the average company CEO will make some critical choices and their company will migrate either up or down. There's no doubt that the strong companies are breaking away from the pack. How everyone else responds in 2011 will determine their fate for many years beyond that.

----
Jeff Sands is a Director with Dorset Partners LLC, a corporate revitalization firm. www.DorsetPartners.com