The statistics say the economy is down just 5 per cent from its peak. From where I sit it feels a lot worse. Most companies I know have seen revenues fall by anything up to 20 per cent - and for a few the decline has been even more savage. No one I talk to can remember a tougher time to be in business.
So what can you do when your top line gets eviscerated? First of all, you cut costs like a dervish - just to stay solvent. But you cannot maintain that survival mentality forever. At some point every organisation has to progress or disintegrate. And in shrinking industries, for most businessess there is only one way to expand: you have to take market share.
In the Darwinian world of capitalism, during downturns plenty of weaker operators cease trading or choose to sell up. The priority for the ambitious is to be on the other side of that transaction, and seize the failing concern's customers, or simply buy its assets. A distributor we part-own has just closed a deal to bolt on a smaller rival's customer base. The additional volume will make an immediate contribution to our bottom line - while as a standalone entity the rival was too small to be profitable. For us the payback on our investment should be less than two years - even assuming no respite from these tough conditions.
