John Collard

With COVID-19 mired in a holding pattern, observers are forming ideas about how business will move forward.

John Collard, the chairman of Annapolis-based Strategic Management Partners, reports an ample amount of action brewing across the markets.

“It’s certainly a time for companies to buy, sell or merge,” he said, “because when they’re sitting in the lull and they can’t use their assets. That’s the time to make a move.”

He said it’s also time to form partnerships, whether it’s an outright purchase of another company or a merger.

“A big company can just buy another entity, but the smaller companies more often merge product lines,” he said. “If they’re the same, you don’t add redundancies, particularly of the overhead. But if they’re complimentary, a deal could ensue.”

New Markets

There are only two ways to increase sales and profits, Collard said. That’s to add new products and services for your current market, or to take existing products and/or services to a new market.

He said he can hardly count the number of times making such a seemingly simple lateral move offers a relatively easy gateway to growth, but his clients almost always balked at the idea.

“I’ve asked CEOs of companies that have contracts with the U.S. Navy why they don’t market the Army, too,” he said. “The Army’s money is as green as the Navy’s.”

One area executive who didn’t have that issue is local investor John Belcher, founder/CEO of JMCB Enterprise Solutions, who took over Annapolis-based ARINC during a time when the company had been focusing its business on the federal government market.

“John saw the opportunities that were being missed,” said Collard, “and started offering the same airline radio services to all major airlines all over the world – and now does business with the majority of that airplane support services market.”

The postscript to that analogy is that the company, now Collins Aerospace, is using the old ARINC network “not only with those major airlines,” he said, “but also with Amtrak. Collins Aerospace is part of United Technologies, a successful holding company when United Technologies buys a company, it’s a company that complements what United does. And that’s what happened with ARINC.”

Same Skillsets

The key today for companies large and small is to determine what they do extremely well and take those skillsets to new markets, but with a caveat.

“It’s key for executives to avoid spreading the company’s assets too thin by moving into different sectors that don’t play to company strengths,” Collard said.

“Let’s say you’re a baker,” he said, “and you want to offer a new product line. You’ve made pastries, but now you want to bake cakes, too. It’s all the same on the bakers end, but that baker realizes that he can increase revenues with a new product for customers to buy.”

He said this idea also applies to restaurateurs, too.

“Today, they’re limited by only having a 50 percent capacity inside,” Collard said, “so now they’re doing carry-out, delivery and outdoor dining so diners can space. Those extra services will eventually evolve to enhance their bottom lines.”

Given the only two simple ways to expand, creative block can be real.

“That’s why I encourage people to have an advisory board,” he said. “A board will give a business owner a slew of ideas and the owner may be able to execute several of them.”

Taking that approach is particularly important as the world gradually emerges out of COVID-19. “Some people are pessimistic about how this will happen, but I’m not,” said Collard. “I think the recovery will take the shape of a “V” curve and that we’ll pop out of this. I think the market is there and the businesses still want trained employees.”

As for the workers, Collard thinks “80 percent will end up where they were before. The rest will go elsewhere or relocate due to normal attrition.”

What’s Next

One reason Collard predicts a solid recovery is that the U.S., having just found out the hard way that easy access to Personal Protective Equipment (PPE) and pharmaceuticals is imperative to a healthy and safe nation, will bring back a considerable amount of product manufacturing from overseas.

It’s not just PPE and pharma products that will be manufactured at home, either.

“Many famous companies are offshore that people think are located in the U.S. left due to taxation,” he said, “and others came here, did well and left, like Toyota, Nissan and Mercedes Benz. And their profits went back overseas, too.”

Collard said companies that took plants from U.S. soil will come back due to better tax situations.

“When [former President Barack] Obama said that jobs that are replaced in manufacturing don’t come back, he was right. However, he didn’t take to the next step, in my view, to say how to repurpose the employees into new, but similar, jobs, which is occurring now,” Collard said. “People can be retrained to run new technologies as new solutions instead of just relaying on robots, which need to be programmed and maintained. It’s a new mindset to create solutions.”

By Mark R. Smith | Senior Writer | The Business Monthly | July 2020 Issue