senior management were at the start of their careers. Therefore for
them the essential problem of surviving and prospering in a
recession is that, with no real previous experience, the likelihood
is that as many wrong decisions will be made as right ones, and the
flexibility of the time to learn doesn’t exist.
and external contracts, raising margins, improving credit criteria
and tightening control of bad debts are trotted out by most and
are, of course, nowhere near the answer.
In fact, these are no more than the way a business should be run
efficiently in normal times. Personally I am instinctively counter
cyclical and want to go in the opposite direction to the norm.
My view is that you need to get radical, be totally objective
and will have to be fairly ruthless rather than emotional. Now is
the time to really analyse your business divisions/sectors, and to
do that objectively you will need external help as internal views
will be merely self serving and self justifying.
Running down old poor portfolios on the one hand, and
transacting new business on the other, are clearly opposite ends of
the spectrum. They require differing attitudes and cultures. If you
cannot sell out your old portfolio at least separate it. Costs are
not important in themselves, but what is important is the
relationship with the bottom line. It often makes sense to pay more
because it can radically motivate and improve the bottom line.
If you aren’t transacting business then either get rid of your
new business staff or start doing business. I know of at least one
team that has done nothing for more than a year.
As for opportunities, be patient and don’t ever ‘bet the shop’.
What a great time it would be to start a middle-ticket business in
asset backed high margin deals. Hey, I have a feeling of déjà
vu.
Philip Derby was CEO of ING Lease (UK) Limited from its start-up
in 1989 until November 2005. He recently set up a mentoring service
to assist companies (both within and outside the leasing industry)
to develop strategies and business plans to survive and prosper in
recession. He can be contacted at philip@philipderby.demon.co.uk.
