Seek out new opportunities

A downturn can present businesses with opportunities, as well as challenges, and strong businesses often capitalise on their position to establish an even greater advantage during these conditions. Businesses that are in good shape to ride the downturn have greater flexibility to invest, strengthening their position while competitors are hamstrung.

Companies should not automatically halt all investment programmes, sacrificing future growth because of current difficulties. Businesses need information in order to have a clear idea of investment opportunities, rates of return and risk levels. Required investment levels are likely to be lower in a downturn due to reduced asset prices and less competition.

In fact, structural change in an industry can be accelerated by a slowdown, as the most progressive players implement strategies that made sense all along, but may have been difficult to push through in the good times because the ‘burning platform’ wasn’t there.

A downturn can be the making of the best businesses, as the changes implemented at this time can make businesses much stronger in the long term.

What questions should I ask myself?

• Which parts of the business generate the highest return on capital, and which the lowest?
• Would they benefit from additional growth capital or productivity investments?
• Do I have a clear view of the portfolio of investment opportunities that I have in the pipeline, and an accurate assessment of their risk and reward profile?
• Is this an opportunity to re-engineer my business to stay productive under new conditions?
• Am I in a stronger position than my competitors to pursue step-change opportunities?
• Do I understand the landscape of assets I would be interested in buying?
• Do I know how competitors are being affected by the downturn and what they would now be prepared to consider?