Can Your Business Stay Afloat in a Slow Economic Growth Scenario?
Now is a good time for handing over the reins to the next generation and retiring old guards and hiring fresh talent
Even as we entrepreneurs continue to live in a state of denial, the International Monetary Fund has put a lion’s share of blame on India for lower global growth projections, as per reports. When we restrict our concerns only to India, the picture is not going to get better anytime soon. There’s no evidence to believe that we may start seeing an 8-10% growth from the next quarter. This cannot be undone.
So what can be done? Entrepreneurs, businessmen need to make more personalized, standardized and conscious efforts to stay afloat. If you were waiting for an opportunity to become proactive, the time is now.
But first up? What’s your goal exactly? If your goal is to make your business not only profitable in this scenario but also sustainable in the long run, this piece is for you.
Forward and Backward Integration
Now is the time when business owners should personally meet key buyers/sellers, travel to relevant trade shows and conferences and identify new opportunities. You should look at forward or backward integration opportunities. Explore what more products and services you can sell or buy from your existing customers and suppliers.
You need to deepen your buyer/seller relationship to a partnership. Look at what other products you can manufacture and what other industries you can serve from your existing infrastructure. For instance, there’s an automobile sheet metal supplier who has successfully started supplying to railways and defence. You need to now explore new markets within and outside India. With the introduction of GST and better transportation, businessmen can now sell across the country.
Leverage from US-China Trade Disruption
US - China trade war has also opened a lot of opportunities. India has free trade agreements with several countries. You can look at duty-free imports of inputs to reduce cost and exports of your goods duty-free. There may be many opportunities of buying out/merging/synergising with competitors. Often the biggest impediment to change is the mindset of the promoters themselves. As business owners, you should realise that your strength is entrepreneurship and not micromanagement. You must have a professional team to take care of day-to-day functioning of the business including sales, purchase and operations. The duties and responsibilities of all the owners should be clearly defined. Now is a good time for handing over the reins to the next generation and retiring old guards and hiring fresh talent.
Internal Overhauling May be Overdue Now
During this slowdown, you can carry out an internal inspection of necessary changes needed in your manufacturing operations to make them more efficient. Take up initiatives that can improve your quality, productivity and lower cost. You may now consider overhauling major equipment, changing layouts, relocate, merge several units, monetise non-productive assets etc. This is also the time to train and retrain your workforce. The workforce should not only be trained to become more productive but also multi-skilled. This is the right time to implement change management tools like lean manufacturing, Kaizen, 5S, KPI/KRA etc.
What about the bandwidth?
While there are many merits in considering an overhauling, you may find that you do not have the internal bandwidth to implement them. Here’s where you can help not only yourself but also the entire industry. Hire external consultants/experts in the relevant areas for correct and timely implementation.
Of course, this is no overnight task. You will need a span of 2-3 months to explore all the above opportunities in detail and then brainstorm with their key team members to make a formal 3-5 year detailed business plan. The plan should have specific timelines, defined roles and responsibilities, and a periodic review mechanism. The entire organisation should get aligned to a common objective.
Fellow businessmen, it’s time. It’s time to come out of the denial and expect the political situation to change or work a miracle. One major principle of business is it should stay afloat in most circumstances. It’s time to take steps in that direction. Proactively explore new business opportunities, build a good professional team, optimise operations and make and implement a detailed business plan. If you do this, nothing can stop you from achieving tremendous growth & success - not even slow economic growth.
Anshul Mittal graduated from Purdue University, USA in Bachelor of Science. He is now Executive Director of Mittal Appliances Ltd, a flagship company of Mittal Group, history of which dates back to more than 100 years in the business of non- ferrous metals and currency coin blanks in India.