Rapid Business Growth’s Blog

The constant chit chat about economic disaster is overdone – now is a time to look for opportunities.

Relying on our Dublin based media to explain what this means gives a very extreme interpretation. We are all doomed! Time to bring back the emigrant ships and TB. Let’s face it you will never see a newspaper headline saying ”Government did a great job – everything calm”. It is in the media’s interest to make stories as dramatic as possible. Not so long ago we had Ford building cars in Cork, and Digital making hardware in Galway . The loss of those industries was a tragedy for the people who lost their jobs, but was not an existentialist threat to the Irish economy regardless of how it was portrayed at the time. The Ford site in Cork gave birth to the Marina Commercial Park. Shutting Digital triggered a whole series of indigenous small business were spawned and rather than being a tragedy, it is now widely acknowledged as a great boost for Galway.

Recessions are cyclical events that remove inefficient actors from the economic stage. There are many people involved in parts of the economy who can’t pay their way. They will go out of business, free up the capital they are tying up and in time, both people and capital will redeploy to other sectors. As Warren Buffet said “It is only when the tide goes out that you see who has been swimming naked”. The Irish Economy is in a period of retrenchment (-1.9% says the ESRI’s quarterly update) , so the demand for goods and services is shrinking. Added to the shrinkage is the relentless march of progress in the shape of increasing efficiency. In broad terms each year less people are required to produce a given amount of output. So if demand remained constant we would require less people employed year. Right now we have a reduction in employment due to efficiency growth coupled with a loss due to the decline in economic activity. This is regrettable for the individuals concerned but has the beneficial effect of holding down wages. (see what has happened the latest national pay deal)

Poor economic circumstances can be great times for small business. Large companies are inward focused and incapable of reacting quickly. All their energies are focused on what Sequoia calls “The Death Spiral”. Where poor economic conditions lead to a swingeing round of cost cutting that saps morale and triggers a further drop in performance, that leads to more badly implemented cost cuts and so on. The fallacy that you can starve a business in to heath constantly returns during downturns.

Small Businesses and especially good small businesses don’t have these problems. There is a much closer connection between the market and the production side. Internal communication lines are tighter. Decision making cycles are short. This means that Small Businesses can be flexible enough to pursue opportunities. Lots of opportunities will appear, as they always do but there are now additional drivers as people change their spending habits, big business outsource and put expansion plans on hold and competitors go bankrupt.

The Irish Economy is still worth about 200 Billion, farming is doing really well, energy cost dropping, inflation has been beaten, wages are stable and interest rates at an all time low! This is a great time for small companies to grow wisely. The about 200 billion euro will be spent in the Irish Economy in 2009, nearly 5 million people will continue to eat butter, wear socks, play games etc. If you are smart enough and brave enough there are loads of opportunities. Think what one successfully exploited opportunity would mean to your business?
For help and assistance with this or for any of your marketing needs, please give me a call. I’m very happy to discuss how we could help you further.

Best wishes
Mike Spratt
www.rapidbusinessgrowth.ie
Phone: +353 1 491 3328