Strategies to take advantage of the recession: Gottliebsen

How do you take advantage of the recession? Here are a few ideas that have come from Business Spectator’s Make Australia Work series.

– Woolworths provides a classic illustration of how to drive home an advantage. Its main competitor Coles was behind Woolworths before the tough times arrived, but has now fallen further behind because it has too much borrowing and the management have taken too long to get their act together. As a result, Woolworths is lifting store numbers staff investment and so on. Any company that finds itself with an advantage over its opponent and has access to capital should use the downturn to take charge of the market.

– Australian Industry Group chief executive Heather Ridout says that many of her members have no forward orders. If the government measures do not kick in soon there will be mass sackings simply to keep the corporate structures going. This is a wonderful time to take over a distressed business. Apart from trade practice issues, the risk is that acquiring a distressed business will drag you down. If there is a danger of that happening then use the Woolworths technique to drive them down.

– As I look around Australian companies I find that a large number of their sales staff have been order-takers for the last decade or so. They are not accustomed to having to go out there and fight for orders. Suddenly, if orders stop coming in, the sales staff may not know what to do. Management needs to find sales people who can create markets for their services and products. These people exist, but have not been required for a long time.

– As often happens, Jeff Kennett has come up with one of the best ideas – to invest in water infrastructure. If your business operates anywhere near the water industry, then starts devising a strategy to take advantage of the situation.

– ACTU boss Sharan Burrow pleads for industry to invest in green technology and says that China is filling the gap – treading the path that we should have taken. I think she is right. At the other end of the political spectrum, John Hewson made similar remarks a few years back.

– Finally, downturns offer the opportunity to improve fundamental productivity. That means retaining your skills base but becoming far more cost-effective. When better times return, companies large and small who have become more productive make fortunes. Australians are not good at measuring higher productivity, so the CEO may need to go abroad to understand and bring home best practice. And remember the new industrial relations bill effectively makes it a requirement for unions to be involved in enterprise bargains – though Julia Gillard is offering companies a “get out of jail free card”. Is it for you?

Those enterprises and their staff who come through this downturn will be tougher and more able. Access to loan and equity capital in this downturn may determine who has the ability to take advantage of the recession. For that reason, the bank manager must be your best friend.

This article first appeared on Business Spectator