Turning Crisis into Opportunity
Albert Einstein is famously remembered for saying, "In the midst of every crisis lies great opportunity." South Africans continue to experience the annoyance and frustration of prolonged power outages. However, during this electricity crisis, it may be worth remembering Albert Einstein's wise words and reviewing how they can be applied in navigating our businesses through these troubling times.
The 6 Opportunities for Businesses in a Crisis
In short, crisis means change. And those resilient and adaptable to change can turn a crisis into an opportunity. Furthermore, businesses that can not only survive but also flourish during a crisis will have a higher embedded value and will be more appealing to investors when the business owners consider selling. Navigating a crisis successfully, therefore, has numerous benefits.
Crises are here to stay. It is worthwhile focusing on a means to harness these opportunities in order to grow a robust, adaptive and valuable enterprise. Opportunities presented by crises include:
Provides time to pause and reflect: A crisis often acts as a wake-up call and an opportunity to take stock of a situation and make necessary changes.
Fuels growth and innovation: A crisis can lead to new ideas and innovation as individuals are forced to think outside the box and find creative solutions to the problems at hand.
Pushes you out of your comfort zone: People are often pushed out of their comfort zones and forced to pursue new strategies and approaches that they may not have considered before, which can help them and their organisations to grow and evolve.
Provides opportunities to learn and unlearn: A crisis also provides opportunities for learning and unlearning old business practices that may no longer be effective. This allows individuals and organisations to ‘reboot their work-drives’ and to make suitable changes to ensure success in the future. It's a time to re-evaluate their values, processes and goals to ensure they are aligned with the changing circumstances.
Creates unity and focus: Another opportunity that arises during a crisis is creating unity and focusing on a common vision. When everyone in the business faces the same challenges and works towards a collective goal, it can bring people together and create a sense of community and belonging. This can result in increased loyalty towards the company and a shared sense of purpose.
Strengthens loyalty: By taking an inclusive approach and recognising that "we're all in this together," organisations can foster a sense of community and shared responsibility. This builds trust and loyalty among employees and customers and creates a more resilient organisation that is better equipped to handle future challenges.
The 7 Tips to Navigating a Crisis
To assist in navigating a crisis, the following guide could assist business owners in building robust yet nimble businesses:
Re-evaluate the current business model: Is there a better way of doing things? Are there opportunities to increase efficiency? Is there scope to pivot?
Identify new business opportunities: A crisis can highlight gaps in the market that require a business solution. What can you do to help solve this problem?
Change your mindset: Could this crisis bring about a long-overdue mindset change? Seek the positives.
Focus on company culture: Does the culture breed an agile, resilient and adaptable organisation?
Communication: Do you have a stakeholder-centric model that seeks input from all stakeholders to better the business?
Balance sheet optimisation: Is your level of debt conservative or high risk? More importantly, is it appropriate to withstand a crisis?
Succession planning: Do you have a team of battle-ready management that can assist in a crisis, even without you? Should you want to sell in the future, is there sufficient depth in the management team to cater for your departure?
The Opportunity for M&A The relevance of Einstein's words also extends to the realm of M&A. Three key factors fuel M&A activity during a crisis:
Companies suffering from a drop in revenue and liquidity constraints during a crisis may look to sell assets or introduce an equity investor who can add significant value to a business by bringing fresh capital and ideas.
Companies looking to grow by diversifying into new sectors or geographies, for example, can do so through acquisition. Alternatively, selling a portion of the business to an investor with industry insights and experience can prove a valuable strategy to bolster the company’s resilience.
Additionally, a change in mindset by business owners can drive M&A activity during a crisis. The realisation that life can be uncertain often prompts them to prioritise spending time with family and pursuing leisure activities over growing their business. This shift in focus leads to the desire to monetise their investment, resulting in the sale of their shares.
Crises are a permanent fixture; therefore, learning to focus on the opportunities they present provides an invaluable skill. By embracing these opportunities and approaching them positively, individuals and organisations can emerge from a crisis stronger and better prepared for the future.
Andrea holds a MPhil Corporate Strategy (cum laude), a BSc Financial Mathematics, an FRM, and is a Certified Director through the Institute of Directors. She has extensive experience in private equity and the financial services sector and has served as a non-executive director on several Boards. Andrea is strategically orientated and has a passion for business.