The year 2009 will need to be treated as a three-act play, rather than as a simple calendar year program operation.
The first part of the year will be a carry-over tragedy of lost jobs, lost momentum and grief for the greedy.
The second part will be the mid-year blues as earnings reports reflect the credit crunch and consumer caution about family security.
The final act will be the rapid growth of SME businesses that have used the start of the year to do their homework and build their market presence.
The global financial crisis will continue to demonstrate poet John Donne’s proposition that we are all connected (“No man is an island”) to both the problems and the solutions – the bell tolls for us all in coping with the excesses and incompetencies of the past decade.
As the world comes to grips with the PM’s maxim that we are all in this together, and the US President’s motif that hope springs eternal in the face of shared adversity, there will be a radical shift to a world of voluntary simplicity, deferred consumption and stringent business investment.
Across the globe we are witnessing a shift away from the gas guzzlers, the random retail wander through the malls to spend on the never-never, and a return to savings and lowered household expenditures.
As insecurity about job hopping and reduced discretionary expenditure take their toll on consumer confidence, there is increasing awareness of the need to cut up a few credit cards, focus on business essentials, and defer a few overseas trips.
While the biggies become smaller, the small business environment that offers superb local service and superior customer relationship management will thrive. As the downsizing and package market expands and the outplacement market replaces the recruitment empires, considerable interest in franchising, self-employment and start-up survival-oriented entrepreneurship will create vibrant opportunities for SME growth.
By May we will see a new set of actors emerge in the financial firmament – the lenders that are actually willing to get down and dirty with smart companies that have ideas, innovative products and real time investment opportunities. As the deluge of bailout funds (around $10 trillion globally over the course of the year) finally gets by the gals/guys with the eyeshades in the remaining guaranteed banks and financial institutions, there will be the emergence of specialist divisions to lend to smart company leaders.
Just look to the north to see what happened in Japan as it coped with its equivalent financial meltdown. After it got to the zero interest rate floor and found that even that did not kick-start the engines of commerce, its Finance Corporation for Small and Medium Enterprise extended national capacity to takeover or guarantee outstanding loans to support money supply for general private institutions, supplying SMEs with long-term low interest finance for expansion and direct long-term funding for marketing and promotion of SME projects.
The Tanner/Henry team under the Rudd “whatever it takes” program budgeting approach will emerge in the next few months in the form of a strategic alliance with the state premiers to take up infrastructure projects, improve health and hospital capital works budget allocations and manage public housing developments.
All of this will offer SMEs the opportunities that the smart ones will have planned ahead for, with the prospect of bidding for more local work and a share of the spoils of a very difficult consumer market.
This act is likely to see Qongqing, Shenzhen and Mumbai become much more important locations for entrepreneurial types seeking finance and production centres for the world financial focus of smart companies than the traditional Hong Kong and Shanghai orientations of those with only a marginal link with the Asian and sub-continental markets.
Expect this mid-year period to see a shift away from a dollar denominated world trade game to a Euro-Asian domestic economy expanding market with links to Australian enterprise and business systems.
Contrary to the current rash of pessimism and repetitive gloom mongering, the next financial year will see a substantial reinvestment in outgoing and entrepreneurial smart companies.
As the flow of the fiscal stimulus packages leads governments around to promote inflationary credit and inflation generating measures, there will be new financial divisions in our major banks that use negative costs of funds to rebuild their shattered reputations in the small business arena.
As governments around the world release projects that promote rather than hinder job creation, invest in longer term infrastructure projects to stimulate regional economies, and redress the damage of social exclusion, any smart company that has a close focus on local service and development plans will prosper.
The key will be keeping and extending the quality of service-oriented staff, building brand and market presence with the key agencies, and cutting unproductive costs while investing in capability for regional growth.
The timing for expansion will be determined by measures of business and consumer confidence that is not shaped by short-term reports of job losses and retail closures.
Governments will need to be careful to invest in small and medium enterprise initiatives, give priority to smart companies that can be more productive of jobs and build regional networks rather than rely on the old business institutional relationships.
In this way the whole economy will have a higher level of performance and the flow of funds will regenerate the necessary level of consumption and development activity as the curtain closes.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.