It seems that almost everyone is currently offering advice on how to bunker down and ride out this bleak economic period. Here are 12 hidden opportunities to help you build while your competitors balk.
- Availability of talented staff. For the first time in many years, the balance of power has shifted from Employee to Employer. The global crisis has seen a large pool of employees return to the labour market. There is an opportunity to recruit talented new team members that were not previously available. If there is a key position that you have wanted to fill for some time, and the business can afford it, you may be able to secure a strong candidate and increase your competitive edge.
- Productivity gains possible. Staff are acutely aware of the economic downturn. It plays out each night on their TV and occupies plenty of air-time in social settings. It can be argued that businesses that have a motivated, empowered and loyal team may, in fact, increase productivity. With staff more conscious of their livelihood and management analysing the business more than ever, staff may increase their productivity through a combination of anxiety and demands from management.
- Strategic review. When things are going well, regularly reviewing your overall business strategy often takes a back seat. But when markets contract, business owners are forced to revisit their strategic plan through necessity. The discipline of regularly conducting a strategic review of the business is a discipline that should be followed in all economic trends. This is a constructive side-effect of the downturn.
- Cheaper finance. Interest rates have fallen massively, so the burden of cost of funds on business is lower. Further, if you have a solid balance sheet and serviceability through your cash flow, there are opportunities to consider further borrowing. Make sure any new debt is considered through a due diligence analysis as the opportunity of any investment must be considered against risk.
- Hungrier suppliers. Your suppliers are trading in this economy, too. Price-cutting and value-adding activities have emerged in many industries. See what your suppliers are offering and test the water with their competitors. Ask what else they can do for you. You’ll be surprised how attentive they are to your requests at the moment.
- Rationalisation of overheads. Every business is conducting a review of overhead expenses. Whether it’s wages, cost of goods sold items or general overhead expenses; all should be reviewed. Cut costs but don’t cut too hard. There is a point at which costs can be cut too deep with an impact on service levels, working environment and revenue.
- Restructuring. In good times you can carry staff and be a bit fat. However, a downturn forces you to analyse staff levels and roles. In opening up your mind to restructuring, you can look at individuals and job functions in a new light. See how roles can be combined. Consider how certain people might perform in other areas of the business. This exercise may result in exciting new challenges for staff, greater productivity and a leaner labour force.
- Acquisition opportunities. Some businesses will shut down or put up the sale sign. This will no doubt provide unprecedented opportunities for some businesses to acquire their competitors for a reasonable price. Keep your ear to the ground for tip-offs, invite broker contact and listen to industry news.
- Vertical integration. In addition to acquisition opportunities, the downturn also provides the opportunity to look at vertical integration. With more “key person” candidate talent hitting the market and industry rationalisation, there are attractive opportunities to expand into new business units. This may be as simple as transferring an existing staff member into the new business unit or hiring a new key person to run it. Any decision on this needs to be based on commercial analysis and consideration of your own individual risk profile. But clearly, opportunities exist here.
- Greater market share. Those that survive the long winter will prosper. As competitors disappear or lose competitive advantage, continuing market players will soak up greater market share. This organic growth through external attrition will create new wealth for those that survive.
- Improved morale. While everyone is talking lost jobs, employee fear and lower morale; those businesses that can hold onto their team through the downturn will win loyalty and engagement. Coming out the other side together and united will have a massive influence on staff morale in surviving businesses.
- Positioning for boom times. Good times will come again. Businesses that survive and position themselves well for the future will be ideally placed to exploit the inevitable return to boom times. The competitive edge or lead time in the gap between businesses in a strong position competing with businesses coming out of distress will have widened. Those in a strong position can influence products/services, price, volume and innovation in their industry to more competitive advantage.
Darren Bourke is a Consultant, Business Coach & Mentor who helps small & medium businesses struggling to maximise profitability, productivity, people and performance. His Free Report titled What Successful Owners of Growth Businesses Do That You Don’t, newsletter and updates are full of strategies and tips to make your business boom. Sign up now at www.businessinfluence.com.au