Put out the welcome mat

This will be the year for smart companies to put out their welcome mat to venture capitalists, lending officers and family friends who want to invest in speculative growth.

It will be a great year for mergers and acquisition specialists as insolvency professionals comb through the survivors of the last few years of constrained development.

Business owners that have struggled to get the funds to keep their doors open and retain good staff are now aware that the big risk is not losing money but losing out on opportunities because they do not have the support of lenders and investors willing to underwrite novel expansion.

It is vitally important to get the holders of cash to get out of their homes and offices and visit with the executives and key staff who can walk the talk of good business and marketing plans for a year of growth.

These people need to look to the future rather than rely upon the past history shown on the new FGT personal and corporate information sources (Facebook, Google and Twitter) rather than the advice of the credit agencies that have let them down in the past few years. Consumers have already been stirring up the likes of Brookes, Harvey, and Lew (see last week’s Futurist blog- Happy New Year).

They are going on line using the new and improved information sources of the web to confirm their belief in the global market. Customers use the new form of word-of-mouth (viral marketing) to get groupons and other deals at the expense of the advertising led establishments. So personal understanding of the way that smart companies are making use of these new forms of personal and corporate communication have to be demonstrated to funding sources that do not want to miss out on the emerging markets of the internet world.

Unless smart companies put out the welcome mat, they will not be able to compete with the top two players in each market that have deep pockets and the capacity to set up their own import agencies, online stores and acquire smaller competitors to take them out of the competitive equation.

Banks that are capital guaranteed by the government in the home lending and corporate capital markets will be looking to expand their investments in viable and sustainable medium enterprises that wish to acquire smaller and/or smarter start-up enterprises that have access to global market opportunities this year. Their lending departments know that they don’t know how to pick winners, so smart companies will need to befriend rather than befuddle their source of investment capital.

In business, the fallout of the recession will result in new configurations. In each sub-sector of the economy the top two operators will grow market share at the expense of independent and family businesses. This tyranny will be increasingly evident in 2011. Enterprises that are too big to fail are identifiable by the depth of their pockets. This allows them adequate capital and resources to ride out downturns and have sufficient funds for innovative products and process technology.

Consolidation of business will be evident by more mergers and acquisitions on the economic recovery road that is still going to take some time, as Consumer Confidence is now 4.6pts lower than a year ago, January 9/10, 2010 (128.9) but two thirds of households – the highest this century – believe that now is a good time to buy major household items.

Gary Morgan reports that there has been some recovery in consumer confidence since the RBA raised interest rates in November and most economists expect that the Qld/NSW floods and global outlook will hold off further rises until the middle of the year.

Don’t expect too much from the middle income homes that are still concerned about the family situation next year and expect it will be a few years before they have paid off their debts and regained their confidence.

However, if your business is offering premium delayed consumption goods or deferred gratification opportunities such as a bright new electric car or high tech gadget, the signs are good, or if you are still offering deep discounts to the bottom end of the market things are on the mend.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.

Email dr.colinbenjamin@marshallplace.com.au
Phone +61 3 9640 0099