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Seeing opportunity through chaos

27 Apr 2020

It seems a long time ago now since Rishi Sunak announced his business support measures on both the CBILS and employment. 

A lot of water has passed through under the bridge in the last month, and it only seems that just recently we are having a relative period of stability. The definition of ‘period’ is fairly open, as I imagine most business owners, including myself, are looking at everything being short term in nature with many fires still to be put out.

It is becoming clearer to me that we are looking at a perhaps longer and deeper recession than perhaps previously imagined with demand shocks likely to remain in place as consumers retrench and bubbles across all asset class continue to deflate, but should this therefore mean that we should be planning for opportunity when that arises?  

This has been at the forefront of the conversations I have been having with business owners that have come to me for advice over the last month. Most have taken advantage of the government schemes in place, and whilst I am highly sceptical of the efficacy of the wider #CBILS (and certainly the suggested removal of PG requirements for businesses shows that government doesn’t really understand how banks see risk), I am hopeful that the applications that have gone in will result in positive outcomes.

Positive outcome or not, opportunities will be uncovered. But how can you take advantage of that? Below are some thematic questions that may be worth considering, as you address this: 

Inward looking

  1. Are we as operationally lean and streamlined as we should be to be able to scale most effectively in this new world?
  2. Are we financed appropriately to grow once we come out of the other side?
  3. Do our staffing needs and organisational structure reflect our growth expectations?
  4. Do we require the level of SG&A costs that we had before?

Outward looking

  1. Can we increase market share if our competitors fail?
  2. Can we maintain market share if our customers fail?
  3. Is our marketing and pricing strategy still relevant?
  4. How do we build a big enough moat around the company to protect it from future shocks?

It is hard to put the head above the parapet at times and consider the bigger picture and the last month has been particularly challenging to do so. But if you are capable of seeing the opportunity through the chaos, your chances of accelerating out of the downturn will improve.

David Battey, Founder of Lumaca Capital

David provides strategic consultancy for SMEs around removing barriers to scale, as well as outsourced portfolio director services to family offices and investment houses. He likes solving problems so is happy to extend that out to a wider network who may be struggling at this time. 

Find him on Twitter @DavidatLumaca

Please note, this content is not produced by the IoD and therefore does not necessarily represent the views or thoughts of the organisation.

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