According to world-renowned futurist and scenario planner Clem Sunter, much of the world, including South Africa, is heading into a period of zero or at best, moderate growth.
The latest downward revision by the World Bank of our projected GDP growth to only two per cent gives further weight to this opinion, creating a scary scenario for many in business.
These are the times that separate the men from the boys. As the clouds gather there are those who will curl up around a warm fire of negativity and share doom and gloom stories with each other, and those who will stick their head in the sand and carry on regardless, as their businesses crumble quietly around them. But there is a third set of business leaders who will tighten their belts, lift their eyes to the long term future and start planning – knowing with confidence that there is opportunity in every situation.
These are the entrepreneurs who will find ways to survive, and indeed thrive. These are the businesses that will be ready to boom when the recession turns, and on the winning track no matter what happens in the meanwhile.
So what exactly defines the survivors, and what key survival strategies will they be using in a flat economy?
Scenario planning is an excellent tool for business and an essential one in an uncertain world, such as the one we currently live in. In Sunter’s book ‘Think like a Fox’ he explains the process of developing future possibilities, and crafting business strategies to deal with them.
In this way businesses can imagine ‘living the future’ and plan accordingly. Scenario planning is a fun activity, ideal for business team building and a great way to avoid becoming another ‘frog in hot water’.
Cut costs and build reserves
Firstly, wily entrepreneurs will be working hard to contain costs and build resilience including healthy cash reserves, by increasing pressure on debtors and negotiating harder with creditors.
They will be on the ball, checking unnecessary expenses and finding ways to curtail running costs – using strategies such as shared rental space, shared services and outsourced staff.
These savings will help to keep prices down without cutting into profit margins. They will also be keeping an eye on their competitors and exploiting opportunities that become available as others falter – for example by advertising in places where competitors used to dominate.
Strengthen brand and build customer support
Businesses will be building and strengthening their brands, focusing especially on service excellence and added value to customers. This brand position will be consistent all the way from the advertising promise to the delivery van, after-sales service and even the cleaning lady.
Customer relationships will be further consolidated by ensuring that everyone in the company believes, understands and expresses the best of the company, at all times.
A great example of a company that has built its market share in tough times is Sainsbury’s in the UK, who have managed to get ahead in a highly competitive FMGC market by entrenching customer-care strategies and a ‘culture of helpfulness’.
As Sainsbury’s Marketing Director, Sarah Warby, says: “We like to [share] lots of news on the business, things such as our pharmacy and health offerings and British Sourcing, that is the drumbeat of our business. We then try to overlay that by being helpful, because what this business has is 144 years of helping customers run their homes.”
The ‘Sainsbury’s Way’ is used to build a consistent, trusted brand inside and outside the company, and the results are tangible as they become market leaders ahead of stiff competition and in a flat economic climate.
Innovate on a tight budget
Lastly, the importance of innovation in a slow economy cannot be over-emphasised. In a stagnant market, as total sales volumes drop, it is fresh ideas and new product concepts that open a jaded consumer’s eyes, and wallet!
Wily entrepreneurs will know that the right questions to ask are ‘How can we innovate given the tight financial times?’, and ‘How can we find the right staff for these new tasks?’ The fact is that some local SMEs are managing to do this quite successfully, using the skills of graduate interns.
Wily entrepreneurs are increasingly electing to “Grab an intern” to access flexible resources that can be deployed into new areas of the business, to do market research, test new products and services and reach out into new markets.
If a graduate intern sounds like a resource you could use to help grow and solidify your business.
The spirit of entrepreneurship is to create solutions to challenges and to seek the thrill of new horizons. Now is the time for businesses to look the future squarely in the eye, and decide to either adapt or die.