How do you grow a business in a recession?

Professor David Rae

The recession continues to dominate the business news, and clearly affects many businesses and individuals severely. From the stories of corporate organisations, most are troubled by high levels of debt and losses. Even so, there are entrepreneurs out there who are growing their businesses despite, because of or regardless of the recession. These high-growth entrepreneurs will be ahead of the curve for even more significant growth as the economy recovers.

High growth businesses are significant because, whilst always a small minority of all companies, they set the pace for the market and are most likely to create wealth and jobs. Government and regional development policies have aimed to encourage and support them, with mixed records of success. There are many myths about high growth entrepreneurship, for example that they are mainly high-technology start-up ventures, whereas many are in fact existing businesses which have been trading for some years, and they are more likely to use advanced technology as part of their business model as to be technology originators.

As a judge in the National Business Awards  www.nationalbusinessawards.co.uk I am privileged in being able to meet and even present awards to some of these exceptional businesses and entrepreneurs. Also of great interest are the Fast Growth Business Awards http://www.fgba.co.uk/2009_winners2.html. These awards are a useful source of case studies for enterprise educators, demonstrating the diversity of their market opportunities, strategies and operational models.

So what makes high growth firms different, and what can other businesses and entrepreneurs learn from them? These vital questions could headline a track of their own at the ISBE conference, but here are some suggestions which are far from revolutionary, yet determined and systematic professionalism in implementing them makes a big difference between being a growth leader and a follower.

Use the recession as an opportunity
Business and consumer confidence and the prices of many commodities and assets, such as property, are lower during a recession. This also affects the values of businesses which may be attractive acquisition targets. So astute entrepreneurs with access to the vital asset of investment capital can acquire other businesses or their assets at keen prices to build up a position for strategic growth.

Steve Leach, CEO of Bigmouth Media, known for their innovative search engine optimisation software, has demonstrated this by making well-targeted business acquisitions. See the video on the European Business Awards website: http://www.businessawardseurope.com

Find out what customers really want and deliver it
Customer tastes, preferences and perceptions of value change in a downturn. Businesses which are perceived as ‘costly’ may suffer from this as well-known upper-market retailers have demonstrated. But businesses which offer keenly priced ‘value’ propositions to customers can prosper in cost-conscious markets.

WEBMART Ltd  won the Business strategy of the year in the European Business Awards, 2009. Webmart are a European leader in low cost print management and the UK’s 3rd largest print management company, using web based technology to provide customers with fast quotes from leading print suppliers at keen prices. http://www.webmartuk.com

Be different
Businesses which occupy their own space in the market with a unique and durable product offer can not only defend this but grow from it, often with a fan base of enthusiastic customers.

Students are amazed when I tell them about Wiggly Wigglers, for example. www.wigglywigglers.co.uk They have been supplying garden worms by post since 1991 and have expanded from this base of wormery products to supply a wide range of eco-responsible garden products, winning a sheaf of business awards along the way including the coveted Dell European Small Business Excellence award in 2008.

Use a pioneering business model
Too many companies try to fight it out using the same old formula, when we know that applying innovation to create value in new ways can provide a vital competitive edge and long-term growth advantage.

The Book Depository was founded in 2004 with the aim of making "All books available to All" through pioneering supply chain initiatives, republishing and the digitizing of content. It has grown into a £40m turnover business, complementing but not competing with Amazon, and supplying ‘the long tail’ of hard to find books. They have won a string of awards, including British Book Industry Awards and Fast Growth Retail Business of the year 2009. www.bookdepository.co.uk I’m delighted that even my last book is available from them - cheaper than from Amazon!


Search for growing markets
A successful business formula can be used to target markets which are growing or have greater potential than existing ones and to enter them with effective sales strategies and sound operational models.

Instant Office Group have grown to £30m turnover after 10 years of providing a consolidated online marketplace for office space and now have a worldwide presence with almost every serviced office operator. They won the Fast Growth Business Awards international business of the year for 2009. www.instantoffices.com


Harness technology to deliver innovation
There are many bright ideas out there, but how many really deliver commercial performance? One that does is the aptly titled Bright Ideas Global (BIG) which supplies LED-light products to the automotive, promotional and personal safety sectors. It has broken through with the ecobutton power-saving USB device which reduces carbon footprint and power costs through an easy to use device, experiencing massive demand and powering annual growth of 300%.
I was proud to present Bright Ideas Global CEO Jeff Gunn with the Entrepreneur of the Year award in the National Business Awards 2009 Wales, Midlands & East Anglia regional final for 2009 www.brightideasglobal.com

Cost management and control
We all know the advantage of cost leadership especially in a fiercely competitive market, and firms such as Ryanair have demonstrated that many customers will always place low cost above service.
Click Travel have succeeded in the fiercely competitive business travel management market by developing IT systems and supplier relationships which give it significant cost advantages over competitors and which it can pass on to its customers, enabling it to increase market share in the downturn and to double its revenue. www.clicktravel.com


Summary
We can see from these examples, and their characteristics, that high growth firms are diverse in their range of opportunity and approaches. They are focused on their market offer, ambitious, innovative and financially astute. They recognise that there are potential market opportunities out there and flexible in how they develop these, making best use of technology and other resources. Most of all they are clearly differentiated from competitors in their business model and the competitive edge this gives them. Other businesses can learn from them, not just in preparing for an upturn but in aiming to grow in the current market conditions.

Professor David Rae, ISBE Vice-president for education
drae@lincoln.ac.uk
 
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