Explore opportunities during tough times

There are many opportunities to explore even during tough times for companies who think and act positive. "All the industries had a bull run from the second quarter of 2009 until the latter part of 2011,but now we are clearly seeing signs of economic slowdown around the globe and we cant be insulated for long as we will feel the pinch.

Hilmy Cader

Therefore, getting ready for tough times is the solution " said CEO, MTI Consulting, Hilmy Cader at the round table discussion held last week at the MTI office.

He said India which was attracting a lot of investments including FDI are slowing down while a big country such as China has also downgraded growth forecasts which clearly shows that times ahead are going to be tough.

Cader said that during tough times companies can either go into hibernation or move forward by reducing unnecessary costs and exploring new opportunities.

Companies which were always lean can continue to be so while the companies which are fat can reduce the fat in the processes initially.

He said rather than cutting costs haphazardly it is better that a company start from the beginning evaluate each process critically and eliminate the functions that are not necessary for the function of the core business. MTI Consulting company introduced the model " Trim and Fit" which can be applied locally as well as globally to face the tough times ahead .

The company has done research and the research shows two types of responses during a tough time such as Chop Vs Cripple and Trim and Fit.

In the Chop and Cripple model indiscriminate cost cutting , disproportionate cost focus which ignores upsides as well as staff costs are cut.

This model will result in an initial reduction in costs but on the long term it will not be viable. The companies which are adopting the Chop and Cripple model shows a panic mode, are negative, adopts a wait and see attitude and focus on short term.

In the Trim and Fit model a company will start from the beginning by going to the fundamentals, absolute critique of own by looking at the performance, recognise ignorance, selective cost optimisation, strong focus on liquidity, search for prudent opportunistic investments, get the organisation into shape, prepared for tough decisions and gear up for the upturn.

In a Trim and Fit model first you look at the risk assessment based on value chain P&L (Vertical verses horizontal costs " If you do this you will suprisingly find unsaid costs in a balance sheet rather than the said costs. "

for example there are some companies who spend 2.25 million to manage one million which should not be so. Activities which do not

bring value to the company can be eliminated and look at the business critically which will help the company to be fitter, stronger and better.

Cader said that it is always necessary to focus on the cash flow as there are companies who are very big but only in books while in reality the cash flow is poor.

Even in tough times you can find many lucrative niches which can be exploited. Also there is no better time to acquire enterprises, brands, entrepreneurs, capabilities, market share and dedicated funds.