Back from the Brink: Lessons from Entrepreneurs

FF Fashion

Sat, Nov 21, 2009
The Business Times


ENTREPRENEUR-DRIVEN companies are inherently different from other kinds of businesses. The leaders of these companies - entrepreneurs - see the world differently.

Entrepreneurs are no strangers to challenges, risk and adversity, judging from how many of them have overcome various struggles in starting and sustaining their business. So how did entrepreneur-driven companies respond to the downturn to make sure they stay on track to becoming market leaders?

When Ernst & Young undertook a global survey of 3,000 Ernst & Young Entrepreneur of the Year award winners and finalists worldwide in the first half of this year, we found that close to 70 per cent of the entrepreneurs were focused on pursuing new market opportunities in response to the economic downturn.

Our latest research in September affirmed that this resolve to grow has withstood the economic pain of the intervening months. Over three-quarters (78 per cent) of the entrepreneurs indicated that pursuing new growth opportunities continued to be their priority for the next 12 months. And they were proactively adapting the way that their companies operate to position themselves for market recovery.

Successful entrepreneur-driven companies are challenging existing business models and testing their existing strategies, so as to ensure that their businesses are still relevant in the new economic reality. As one entrepreneur aptly puts it: 'Innovation is not to be found only in a new product or service. Sometimes, the most innovative ideas can be in the business model.'

Hence, entrepreneurs are looking at ways to work more closely with customers, suppliers, distributors, and in some cases, select competitors; as well as possibilities to forge new partnerships to drive innovation and acquire knowledge.

When we asked entrepreneurs how their business priorities around transactions have changed in the last six months, their response showed that their appetite for transaction opportunities remains relatively strong. Close to half of the respondents were concerned that they would miss the current window of opportunity and similar numbers are considering buying their distressed competitors.

It was also clear that when doing transactions, they are determined to focus on strategic value rather than just pure growth. These attitudes seem to differ from what other companies have been telling us globally, where there was far weaker emphasis placed on growth and acquisitions.

Also, customers come first for entrepreneur-driven companies. Our September research showed that over three-quarters of the respondents have increased their focus on customer satisfaction and loyalty. The same can be said for expanding into new customer segments and geographies.

The questions that entrepreneurs constantly ask themselves are: How can the company optimise its market reach and product and service mix? How can it exploit opportunities in new geographies, achieve optimum returns and diversify risk?

To get ahead with customers, entrepreneurs are doing what they do best - innovate. They do so by thinking creatively about what they already offer, their distribution channels and ways to leverage new technology to penetrate new geographies or segments. In fact, 60 per cent of the research respondents have a focus on implementing technology solutions to achieve greater business efficiency or accelerated growth.

To really get ahead, entrepreneurs are also careful not to delay decisions. Even the best decision needs to be timely. Our research showed that 45 per cent of the respondents have been increasing the speed of their decision-making since the economic downturn, which is not unexpected, since capitalising on the window of opportunity where competitors may be weakened can be very rewarding.

The way successful entrepreneur-driven companies are behaving as they ride out the tough times provides interesting food for thought on how companies in general can gear themselves up in a recovering economy.

The consensus is that companies will have to deal with a new normal in the future. With boardrooms and investors tightening their scrutiny after lessons learnt from the recent crisis, companies should start asking themselves pertinent questions such as:

• How well did your strategy stand up to the downturn?
• What major changes have you made as a result?
• Is your company still fit for purpose in the new environment?
• How do you foster and develop innovation in your business in line with future growth objectives?
• How quickly can your company put an effective response into the market?
• Are your budgeting and forecasting processes responsive to changes in the economic climate?
• How do you balance performance and risk?
• Can you quantify, assess and manage the key risks to make informed business decisions?
• Which emerging market(s) will be the most important in the short-, mid- and long-term, and how do your investment plans prioritise these markets?

We believe that a new performance agenda is emerging for companies as we speak. Competition will continue to be intense even as the market stabilises. Experience has proven that significant market disruptions are not impossible and the unpredictability of events can bring even the largest of companies down. Regardless of size or type of company, the best way forward is perhaps to start thinking entrepreneurially and recognise that there are always opportunities amid challenges - if one never stops innovating.

The writer is managing director for Ernst & Young Advisory Pte Ltd