Recession is coming but it is a great time to grow your business
25th November 2015
Who would want to be a CEO at the moment? Leaders of any company, especially a public company with expectant shareholders, face a real dilemma over which countries and markets to invest in for the future. The Middle East is in turmoil or at war. China’s economy is stalled. Russia has sanctions. The EU is in poor shape and on the brink of recession. Japan has had two decades of low growth. South Korea’s current growth forecast is 2.8% and interest rates are at a record low. The one bright spot has been Africa but figures from the African Development Bank Group point out that strong 6% growth in countries such as Nigeria has been offset by weak 1.3% growth in larger economies such as South Africa.
The temptation is to focus on existing operations and achieve improved shareholder returns through tighter cost controls and improved productivity. Rolls Royce Chief Executive Warren East announced yesterday that they would be targeting annual savings of £150 and £200 million a year and 2,600 job losses after they announced their 5th profit warning in less than two years. When world class companies like Rolls Royce start making these kinds of announcements you can be pretty certain we are all in for a rocky ride. Businesses of all types face an uncertain future at the moment. So what do we do when the issues that are creating uncertainty in the world economy are just too big for companies, individual and collective governments to solve? The answer is you have to focus on making your own business better, more resilient to economic turmoil and more highly regarded by your customers. Make your brand more salient, your products and services easier for customer to find and buy, diversify when you see new opportunities for appropriate expansion.
Growth opportunities for well run companies are easier to realise in times of uncertainty and recession. The cost of new acquisition is lower, the volume of competitive “good news” marketing and PR activity is lower so it is easier to cut through the media clutter. Customers become more discerning in their choice of suppliers. When times are hard you should be getting more business more easily not less. By investing in targeted marketing and business development activity at a time when competitors are cutting back you send a powerful message to customers and prospects that you are thriving and growing while competitors are losing marketshare. In times of recession customers flock to companies they believe are thriving. No one wants to buy products or services from companies that may go out of business.
The government is working hard to reassure us all that the UK economy is growing and in good shape. The tealeaves tell me that at some point in the near future this will change and we will slip back into recession. I sincerely hope I am wrong but the ever increasing headwinds of bad economic news from around the world will hit the UK at some point so now is the time to identify opportunities, mitigate threats and put money and resources aside so that you can build your brand and your business at a time when competitors are weakening theirs with bad news stories and cutbacks.
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