I attended the Real Business Entrepreneurs summit last week where the focus was on the possibility of recession, when it wasn’t on the the Governments changes to CGT! There were a number of take-aways worth sharing as many people face their first slow-down whilst in employment. Once again the “Born Multi-Channel” generation have something some of us older folk don’t have!
So what should companies do as they head toward the impending doom? Firstly we need to get things in to perspective. This is not a recession it is a slow down. GDP growth in the UK for 2008 is forecast to reduce from 3% to 1.7% according to the CBI with 2009 no better. Also, unlike previous slow downs, what is happening has not been caused by the economic cycle is has been caused by a credit bubble. This is the most concerning aspect in many ways as the outcomes are unknown.
With the backdrop of uncertainty companies should focus on the following areas and opportunities:
Focus on profits and cash: no big surprises there but some companies have been known to increase rather than reduce gearing which increases the likelihood of failure particularly with interest rates unstable and the Libor rate high.
Competitive strategy: competitors who are more leveraged will struggle. You need to consider your price policy for commodity products so that they generate either profits or market share or both.
Recruitment: there is an opportunity to convert owner/managers of competitors to employees.
M&A: look for M&A opportunities in related but recession hit sectors. Also for early stage companies that may be short of cash and therefore cheaper.
As Gus Hedges of Drop the Dead Donkey fame would say “problems are the pregnant mother of opportunity” and this is true of the situation we are entering. Keeping the balance between inward and outward focus correct is probably the biggest challenge owners face.
The global economy
25 04 2008I attended the Real Business Entrepreneurs summit last week where the focus was on the possibility of recession, when it wasn’t on the the Governments changes to CGT! There were a number of take-aways worth sharing as many people face their first slow-down whilst in employment. Once again the “Born Multi-Channel” generation have something some of us older folk don’t have!
So what should companies do as they head toward the impending doom? Firstly we need to get things in to perspective. This is not a recession it is a slow down. GDP growth in the UK for 2008 is forecast to reduce from 3% to 1.7% according to the CBI with 2009 no better. Also, unlike previous slow downs, what is happening has not been caused by the economic cycle is has been caused by a credit bubble. This is the most concerning aspect in many ways as the outcomes are unknown.
With the backdrop of uncertainty companies should focus on the following areas and opportunities:
As Gus Hedges of Drop the Dead Donkey fame would say “problems are the pregnant mother of opportunity” and this is true of the situation we are entering. Keeping the balance between inward and outward focus correct is probably the biggest challenge owners face.