Don’t Start a Business in the Recession… Not!

If position, position and position is vital in identifying and enhancing the value of an asset in the property market then cash, cash and cash remains paramount in any business but never more so than in a new venture in these cash strapped times.

Starting a business in a recession may not be your first choice as an entrepreneur but if in fact, whether through desire or as a result of unforeseen circumstances, you find yourself in such a position an enterprise started in a downturn may not be any less successful than one started in a boom provided, whatever the temperature of economy is, the key principles of business management are adhered to.

Management books abound that include such essential ingredients to success as; a business plan, a budget, a marketing strategy and of course a people management and development process, all of which of course are very worthy, maybe even for some particularly institutional investors a prerequisite, but in my 25 years of experience of buying and selling over 300 businesses they are ingredients that, without the recipe cannot be blended into a meaningful dish.

Anyone can be taught to cook, as indeed Jamie Oliver has proved, but only a few will make truly great chefs. In every recipe one or two special ingredients are what actually help turn the dish from a simple supper to a magnificent dinner.

In business this is cash. You simply wont survive if you;

a) Can’t make it
b) Free it up
c) Access it from alternative sources if your own particular well has dried up.

This ingredient has always been particularly special but now it is particularly scarce.

Here is my recipe for cash management;

Jo Haigh's Business Recipe

So you now have a recipe and the all important secret ingredients – so it can’t fail… or can it?

Life’s virtues include faith, hope and charity and behaving with such moral fortitude must surly bring its rewards.

Business virtues are in fact not too different, replace faith with belief and enthusiasm in you products and services; it’s seen many a despondent entrepreneur through dark times, and instead of hope how about intuition for the truly talented, this will rarely let you down. And finally charity, a new business is very greedy and not just for cash but of your time and energy.

Like an athlete training for a marathon, it will sap your strength and bleed you dry. So practice patience, a skill many entrepreneurs sadly lack but which if harnessed can deliver more than any other business virtue.

Some make millions by putting all their resources on a single play of red or black, but the shrewd wait, judging the market and then seizing the opportunity, watching as the avaricious and foolhardy stand bereft.

Being patient doesn’t mean doing nothing, far from it. It means optimising the moment in a downturn. There will be lots of these around for the shrewd and savvy entrepreneur so your choice should be someone who

- Makes things happen
- Watches things happen

Or someone who rather sadly says
‘what just happened then?’

Seen in the right way the recession brings not just problems and disasters, which it certainly does, but also opportunities to be grasped.

The question is are you up for the challenge and the ride of a lifetime?

Jo Haigh
Head of Corporate Finance for MGR

www.mgr.co.uk
www.jo-haigh.com

About the Author

Jo Haigh

Jo Haigh is a Partner and Head of Corporate Finance for MGR, a company based in London and Yorkshire and a partner in the FDS Group, a specialist training and development business.

An experienced dealmaker, Jo specialises in putting together the right deal at the right time and in the right format for growing businesses throughout the country. She has bought and sold over 300 companies in the last 20 years specialising in owner managed companies.  More >>

 

Building Staff Morale Post Redundancies

The Academy for Chief Executives, a leading provider of experiential business learning® facilitates groups of CEOs and Managing Directors who meet together every month to network and take full advantage of experiential learning. Part of membership involves members taking their issues to the table and discussing them with their peers.

At a recent meeting, one of the CEO members raised an issue regarding building motivation of remaining staff post redundancies.

Advice came from those who had made people redundant or had been made redundant in the past:

1. Announce and complete as quickly as possible
2. Cut deep rather than repeatedly
3. Seek legal advice to minimise risk of reprisal
4. Communicate openly and honestly the reasons and basis for redundancy to everyone
5. Confidently and positively share a compelling picture of the future and strategy / tactics to rebuild

For confidentiality reasons we cannot divulge all of the advice provided by our members – however, we do hold open meetings where guests are able to attend and experience for themselves the real power of ‘The Board You Could Never Afford®’. To find out how you can take advantage of advice like this every month, visit www.chiefexecutive.com.

 

Pay Increases – Is Now the Right Time?

The Academy for Chief Executives, a leading provider of experiential business learning® facilitates groups of CEOs and Managing Directors who meet together every month to network and take full advantage of experiential learning. Part of membership involves members taking their issues to the table and discussing them with their peers.

At a recent meeting, one of the CEO members raised an issue regarding pay rises in the current economic climate:

“My business has had a great year and I was planning to give staff a 5% pay rise, but now I’m not so sure. What do you suggest?”

This triggered a lively debate during which it emerged that members had dramatically scaled back their pay awards from those suggested in a similar discussion in a previous month. One company that had decided upon a 4% award last month actually pulled in the day before announcement and awarded 0% in conjunction with a redundancy programme. There were similar grim tales from others around the table. The level of pay awards is clearly in dramatic decline at the moment and inflationary expectations are also falling away.

In the end the consensus was to conserve cash in the business and to keep your cost-base competitive. But recognising the issue-holders values of fairness and reward for a good year the suggestion is to give c.2-3% pay rise and either 1 weeks holiday or 1 weeks extra pay as a non-consolidated one-off “thank you” to all staff.

For confidentiality reasons we cannot divulge all of the advice provided by our members – however, we do hold open meetings where guests are able to attend and experience for themselves the real power of ‘The Board You Could Never Afford®’. To find out how you can take advantage of advice like this every month, visit www.chiefexecutive.com.

 

Cost Reduction Ideas for SMEs

The Academy for Chief Executives, a leading provider of experiential business learning® facilitates groups of CEOs and Managing Directors who meet together every month to network and take full advantage of experiential learning. Part of membership involves members taking their issues to the table and discussing them with their peers.

At a recent meeting CEO members discussed the issue of reducing costs. In any organisation, but especially SME’s where there is no central purchasing function, there comes a time when a thorough audit of costs needs to be done and then the task of applying common sense to reducing costs needs to be actioned.

A number of areas were highlighted where there is often overspend:

1. Mobile phone contracts often get out of synch so the overall company contract never has a definite cut off for re-negotiation. This can mean a sizeable cost reduction on charges (40% for one of the members).
2. Sanitary disposal does not need a daily collection yet companies often pay for it (60% reduction achievable through re-negotiation).
3. IT support is another area where costs can multiply without control.

At any time, but even more so during an economic downturn, all companies need to reduce costs as well as be very active in client retention and sales. These few pointers may just start you in the right direction for initiating cost reductions in your own business.

For confidentiality reasons we cannot divulge all of the advice provided by our members – however, we do hold open meetings where guests are able to attend and experience for themselves the real power of shared experience and experiential learning alongside fellow leaders, CEOs, MDs and entrepreneurs. To find out how you can take advantage of advice like this every month, visit www.chiefexecutive.com.

 

Senior Executives get made redundant too

The Academy for Chief Executives, a leading provider of experiential business learning® facilitates groups of CEOs and Managing Directors who meet together every month to network and take full advantage of experiential learning. Part of membership is ‘The Board You Could Never Afford®‘ where members take their issues to the table and discuss with their peers.

An issue recently discussed was that of a Managing Director who had been made redundant after spending over 20 years with the employer.

I’d like to share with you some snippets of the advice offered by fellow members:

• Consider trying Interim work after losing your job
• When you’re made redundant it’s important not to rush into things – take time to get your “head straight” before trying to get interviews
• Make sure that your CV really addresses all your strengths and experience before applying for new jobs. It is often best to get someone with recruitment/agency experience to help you with this as they can see things that you might take for granted

Membership of The Academy for Chief Executives isn’t just about sharing the good times – many members find the support of their fellow members invaluable during difficult times, whether that be the chance of utilising a wider network of business leaders, or simply to talk through a problem or challenge with a sympathetic, but unbiased ear.

The above is just a snippet of the advice given by our members. For confidentiality reasons we cannot divulge all of the advice provided – however, we do hold open meetings where guests are able to attend and experience for themselves the real power of ‘The Board You Could Never Afford®’. To find out how you can take advantage of advice, networking and support like this every month, visit www.chiefexecutive.com.

 

How To Survive A Recession?

The Academy for Chief Executives, a leading provider of experiential business learning® facilitates groups of CEOs and Managing Directors who meet together every month to network and take full advantage of experiential learning. Part of membership is ‘The Board You Could Never Afford‘® where members take their issues to the table and discuss with their peers.

Most months, the issues discussed are as diverse as our members’ businesses, however, this month I noticed that many groups were discussing the same issue:

“How to survive a recession”

I’d like to share with you some top tips offered by our members:

A: To Ensure That You Survive …

• Hoard your cash! Think twice about major investments at during a recession
• Ensure that key performance indicators and financial numbers are delivered promptly and as close to the month end as possible
• Watch debtors very carefully
• Manage stock levels
• Pay careful attention to prices, seek increases where possible and maintain margins
• Ensure that your financial planning takes into account the 25% drop in revenue
• Keep all staff informed of your plans and reassure them about the company’s future; it’s important to maintain staff morale – we re all being bombarded by bad news concerning the economy
• Keep key customers and suppliers informed too and help your suppliers recession-proof their businesses
• Ensure everyone in your team is aware of their role in sales and marketing
• Outsource some of your team to work for others to reduce costs while sales are low

B: To Thrive During The Recovery …

• Recognise that large clients will rationalise their in-house functions in a recession and this creates opportunities
• Do not cut marketing and sales budgets, but focus in these areas during a recession
• 2009-10 will be a good time for investments, suppliers will be pricing keenly to win business, builders will be chasing cash not profits
• Acquisitions will be available to those with strong balance sheets

This is just a snippet of the advice given by our members. For confidentiality reasons we cannot divulge all of the advice provided – however, we do hold open meetings where guests are able to attend and experience for themselves the real power of ‘The Board You Could Never Afford’®.   To find out how you can take advantage of advice like this every month, visit www.chiefexecutive.com.

 

Buying a business during an economic downturn

The Issue:

“Should I buy a company during an economic downturn?”

The advice from members of The Academy for Chief Executives was:

* We certainly shouldn’t generalise about the best time to buy a company. There are advantages to purchasing a business during an economic downturn and if the synergies are right then timing can be irrelevant. However due diligence of ALL the important aspects, not just financial, must be carried out to ensure the right decision is made.

* In a major economic downturn when there is a negative feedback loop concerted action is required to mitigate the recession and to stop the spiral; those companies who have the courage to weather the storm and take the opportunity to expand often come out stronger than ever before.

* Many MDs and CEOs sitting around the table (‘The Board You Could Never Afford’) had previously experienced an economic downturn and were able to offer sound advice to those who hadn’t experienced a recession.

The question of whether to buy a company during an economic downturn is an example of the type of issue discussed at an Academy meeting – and this is just a snippet of the advice given by our members. For confidentiality reasons we cannot divulge all of the advice provided – however, we do hold open meetings where guests are able to attend and experience for themselves the real power of ‘The Board You Could Never Afford’.

The Academy for Chief Executives, a leading provider of experiential business learning facilitates groups of CEOs and Managing Directors who meet together every month to network and take full advantage of experiential learning. To find out how you can take advantage of advice like this every month, visit www.chiefexecutive.com

Brian Chernett
Founder
The Academy for Chief Executives