Ambition Magazine - May/June 2009

Posted by jpayne on May 10, 2009 under Business - In The Press, Business Growth |

Julia Payne In The Press

Filling The Gaps

Ambition Magazine May/June 2009

A recession provides five key growth opportunities that clear-thinking firms should look to exploit.  By Julia Payne of Julia Payne Associates    

Recessionary times normally ’surprise’ most business people; it’s like the bad times have crept up on them without warning. Very few find themselves financially and strategically set for a recesiion before it arrives. Fear dominates. Everyone hangs onto everything they have for fear of there not being enough to go around. Scarcity kicks in and with no money moving around the system, things start to grind to a halt.

It’s important to remember that these business cycles have been repeated several times in the past decades. If this one follows suit, markets will recover and grow. While it goes without saying that the immediate concern is survival, you also need to ensure that you plan for future recovery and your future growth.

It stands to reason therefore, that these times present huge opportunities for business to fill the gaps that their competitors are not taking advantage of. Perhaps as a business you don’t have much, if any, cash to invest, but thinking strategically costs nothing. It can have both immediate and long-term benefits, allowing you to look at different ways of doing things and placing you ahead of the competition when the upturn arrives.

if you try thinking, ‘what are the opportunities’, rather than ‘how can I survive’, you can engender a new and positive mindset not only for your business, but also for yourself, allowing you to open your eyes to the opportunities available.

So what are the five key growth opportunities in a recession?

1. Product Innovation

Are you still selling the same product in the same way and with the same pricing structure as you were one or two years ago? If so, you could be selling what was a boom product in a recessionary market. It’s just not going to fly.

The key to this strategy is to know how to innovate your product, when to introduce your ‘recessionary products’ and when to ditch them in favour of your innovated growth product.

Are there underperforming products you can drop? Can you add features that will increase the value of your product? Can you repackage your existing technology or product to suit a new business need? Can you make a small incremental change to an existing product to give you a new one? Focus on ‘need’ products, rather than ‘want’ products.

In addition, the downturn could be the best period to reposition your business. It is far harder to do this at the height of the market when your focus is elsewhere. Make sure your marketing matches oth your products and your positioning and look at different media to promote your business. For example, with the rise of social networking, consider how you can build new communities, and with them, relationships.

Research has shown that businesses that innovate their product during a downturn always do well during the next boom.

2. Channels to Market

If a business does not have enough revenue coming through during a recession then it is probable that whatever channels to market the business was using pre-recession, were either not sufficiently established or not the correct ones to see them through all parts of a business cycle.

Now is the time to look at other ways to take your existing or newly innovated products to market. You may be able to increase your sales and market share significantly by using different ot additional routes. Have you considered piggy-backing other businesses’ customer bases, joint ventures, agents or partnerships? To know how best to get to market, it is essential that you know your customer base and their buying methods. If you haven’t invested in this to date, then now is the time. Customers don’t stop buying during a recession - they just buy more cleverly. Not only will developing deeper customer relationships provide you with ideas for new products and how to package them, it will bring you closer to your customer base - essential for both short and long-term growth.

If it takes a business too long to establish new channels to market, then it can miss a large chunk of uplift readily available in the next growth cycle.

3. Functional Structure

Question: What is one of the key things that can stop a business owner or manager from finding the time to develop their product and explore different channels to market? Answer: being dragged into the daliy management of the business.

During a downturn, management tend to get dragged back into the everyday detail of the business. This means that there is a misalignment of the micro strategies needed to run a business and the macro strategies, such as mergers, acquisitions and new markets which will allow you to grow. If you have been drafted back in to run the day to day operations, how are you going to find the time to discover or undertake growth initiatives/ You need to do both. Otherwise you may come out of the recession in one piece but not aligned with your growth strategies. If this is the case, then in reality you may miss the boat, as you struggle to play catch-up and align the business for growth, while the market is already surging ahead - taking your competitors with it.

4. Skills.

During times of economic uncertainty, it is unsurprising that companies focus on the short term, but it also means that it is easy to ignore the development of skills that are critical to the day to day delivery of the business.

Now is the time to be developing the skillset of your employees and to be looking around for new talent. Can you tell who is rising to the challenge and who is burying their head in the sand? Are you employing people who do not really add anything and in truth, haven’t for years? Are you as the leader, having to bear all the responsibility, or is your team playing an active part?

There is widespread consensus that investing in both your skills and those of your team can play a major part in surviving the recession and building a greater skills set post recession. Fully understand the competencies that the business needs to deliver its strategy now and in the future, and then undertake an audit of skills within the business to ensure you have the necessary skill sets.

The same can be said of your infrastructure. Make sure it matches but does not exceed your current needs and ensure it is also the bedrock for future growth. A fast-moving business coming out of a recession builds its capability to match the speed of the market and not trail behind it.

5. Succession Planning

Many businesses forget staffing succession during downturns. They rely on people staying out of fear that they will not get another job. However, post recession, if cultural difficulties have not been addressed, staff will leave. This creates a recruitment problem for businesses at what could be a crucial time. While other businesses are starting to grow during the upturn, many businesses will spend their time re-staffing and outlaying valuable investment monies on recruitment costs.

As well as building skill sets, start to consider who internally could ascend to key positions within your business. Begin the process of gaining senior management support, standardise employee evaluations, target key positions for succession and define attributes and behaviours. Encourage and communicate with your high-potential staff to ensure that they are truly committed to your business. Show them the opportunities available for career advancement. This in turn will breed confidence and encourage them to see their long term future with your company. you don’t have to succumb to the doom and gloom.

Be aware of the opportunities and seize them.