Decalogue of business improvement in times of crisis

Would anyone dare to affirm that we are not going into crisis? I do not think so. But this, far from what it seems, is not bad news. At Improven we have witnessed a multitude of crises in different sectors and countries and we have a very optimistic view of these situations due to the phenomenon that we call "crisis concentration".

How do you get to the concentration of crisis? There are two absolutely different competitive environments for crisis situations: atomized sectors and concentrated sectors. As in Spain most of the sectors are quite atomized, we are going to see the competitive dynamics in a crisis situation that usually occurs.

Before the crisis, our example sector had 225 SME companies with the following characteristics:

• Total market size: 2,306 million euros. Only 5 companies (approx. 2% of the total) above 100 million euros of turnover. These 5 companies concentrate 44% of the market share. A total of 54 companies below 24 million euros. No clear correlation is found between size and profitability.

Graphically, representing in a billing / profitability matrix:

Faced with a type of sector like this, the crisis is not bad news, but what it usually generates is that it "concentrates" the sector, that is, there is a minority of companies that do very well and a majority that do not do so well. well. In this situation, leaders are usually better positioned.

After a few years of crisis, it was a sector that grew at a rate of 2% although the most important thing is that the number of companies (and also their profitability) was transformed from a sector of 72 companies to only 31 (that is, that 57% left the sector) and only three companies had practically 50% of the quota.

And graphically, representing it in a billing-profitability matrix:

Obviously, after seeing the evolution of the sector in terms of sizes and profitability, we see that after the complicated situation of the sector, there have been a minority of companies that have grown significantly (partly due to acquisitions) and that have also improved their profitability..

This shows that the crisis can be a great opportunity and to take advantage of it we recommend the decalogue to improve in times of crisis:

1. Have a strategic plan and stick to it. Make thoughtful and calm decisions Be optimistic. Make decisions and don't go paralyzed. Analyze the businesses you're in, and study interesting business investment opportunities in turbulent times. Focus on your best clients. Identify risks and opportunities in relationships with key players: suppliers, banks, customers… Cut costs radically, but not in strategic activities. Retain the best talent. Run, run and run!

I think the conclusion seems clear… the crisis is not bad news for everyone but it is true that you have to manage well to take advantage of the benefits that the crisis brings to a few.