The recent Global Financial Crisis has seen some businesses struggle, or even perish, whilst others flourished.  Some key lessons on operating business in tough times emerged.  These lessons are shared and explored from a practitioner’s viewpoint in this article.
From earthquakes, to floods through to a major loss of confidence in the market place, external events can seriously impact a business. These crises remain outside of the control of the businesses and, as such, may not be predictable or preventable.  Yet commensurate with its needs, capabilities and capacities, a business can aim to become naturally resilient and durable and build on these strengths. This can help the business not only survive but to be well positioned to capitalise on the opportunities presented in a tougher business environment.

One of the lessons reiterated by the current Global Financial Crisis is that the business crises arise suddenly and take unprecedented shapes. For example, securing funds, to product recalls, to responding to floods and droughts, to security issues, strikes and more - crises of differing natures and intensities need to be successfully navigated. Sometimes, crises appear more like a norm and not the exception.  Successful businesses have revised their view (from “if the crises did not occur, we would be successful” to “crisis are part of the landscape and we operate to them”) and have built in a natural durability and resilience capability into their operations.

Although the ability of a business to respond to a crisis depends on many factors including the severity of the crisis and the capability and capacity of the business, the Global Financial Crisis has also underlined some other major points including:

• No change in business fundamentals - The business fundamentals do not change in a crisis:  Indeed the consistent and persistent application of business fundamentals is the key to enduring the crisis, even flourishing in the crisis, e.g cash-flow management, debt management and risk management.
• Strategies remain - The underlying strategies of the business should not change:  The priorities and plans need to change but good underlying strategies remain unchanged, e.g. a vertical integration in a market strategy is still valid in a crisis.
• A crisis provides opportunity - The saying “never miss a good crisis to get things done” comes to mind because it allows businesses to build infrastructure, re-engineer processes and address other issues they may not have been able to address previously when priorities may have been on growth, i.e. meeting growth opportunities requires a different response to consolidation of the business and preparation for the next growth phase.
• Value of products/services - Those businesses that focused on delivering valued products/services and developing the values of these assets rather than “paper assets” were of solid value before, during and after a crisis.
• Sustainable profitable business comes from a longer-term focus - Businesses with a focus on the immediate tend to adopt a “crash and burn” approach without care for the consequences.  Those businesses using a sustained profitability approach are well placed to capitalise on opportunities provided by a crisis.

My experience in the industry can be best summed up as “business in tough times is about consistency and persistency in the business fundamentals”.  Seven business fundamentals to focus on are described below::

1. Cash-flow management:  This is the survival factor of any business, particularly in a crisis.  Often the priority becomes cost cutting, significant cost cutting in a short-period (from cutting of staff and inventories, to scaling back operations and reprioritisation of markets).  A sale of assets or securing investment may also be required to strategically secure cash-flow, e.g. the part sale of Aussie Home Loans to the Commonwealth Bank of Australia to strategically secure the business.  Those businesses with well managed cash-flow before a crisis, were better placed to mange through a crisis and preserve the long-term business sustainability.
2. Conservative balance sheet:  Aligned to cash-flow management is the state of the balance sheet.  Again those businesses that prioritised a strong balance sheet, managed conservatively to sound business principles, were of value before, during and are very well placed after a crisis.  Many businesses with highly leveraged balance sheets have struggled and/or have not survived the Global Financial Crisis.
3. Risk management:  Whether it is the financial risks seen in the headlines of the Global Financial Crisis, the financial risks of the Savings and Loans crisis of the 1980’s, or the manufacturing risks associated with the notorious industrial plant failures in Bhopal India in the 1970’s, those businesses which have managed their risks to proven practices (from balance sheets to risk based contingency planning and recovery – Sherringham, 2009) are in a stronger position during and after a crisis. 
4. Legislation and compliance:  The Global Financial Crisis showed that those businesses that worked within, especially those working with the intent of, legislation and compliance, survived the Global Financial Crisis in better shape than those who resisted legislation and compliance, e.g. Basel compliance for the provision of capital for operational risk or the regulatory framework of the Australian and Canadian financial systems.  Businesses which tend to naturally adopt legislative and compliance principles often do so because they align with the best long-term interests of the business.
5. Customer preservation:  Preservation of customers and the related income is pivotal to cash-flow management, especially in a crisis.  Those businesses that have valued customers and have induced loyalty within their customers are better placed to survive and even grow their business during and after a crisis.  Customer preservation activities (from as simple as talking to customers through to small changes but advantageous changes in trading terms) can often yield significant results for small effort, e.g. communities and neighbourhoods prioritising their expenditure to support businesses in their local communities.
6. Discounting:  The reaction of many businesses in a crisis has been to discount and cut margins.  Whilst applicable in many instances, discounting may not be a sustainable approach.  Those businesses that focused on a value for money relationship with their customers have often preserved their margins through a crisis.  Indeed, those businesses able to preserve margins and secure cash-flow are often well placed to acquire customers during and after a crisis. 
7. Focus on core competencies:  Those businesses that focus on their core competencies and consistently and persistently deliver these products/services to meet and exceed expectation are successful businesses.  A crisis often leads to a re-focusing of business effort on core competencies, leaving the business in a stronger position (Sherringham 2005). 

This article used the Global Financial Crisis as an example to illustrate resiliency and durability in business.  The business landscape is a series of crises of differing intensities that need to be successfully navigated.  The inbuilt redundancy, resiliency and durability that can be enhanced by risk based contingency planning and recovery.  Taking a longer-term strategic perspective with consistent and persistent application of business fundamentals is good for a business before a crisis, is how a business survives a crisis and leaves a business well placed to capitalise on the opportunities provided by a crisis.  

REFERENCES

1. Sherringham K (2005)  Cookbook for Market Dominance and Shareholder Value: Standardising the Roles of Knowledge Workers.  Athena Press  London  88pp.
2. Sherringham K  (2009)  Resilience Capability – Developing Enterprise Capability.  Business Continuity Journal Vol 3 Issue 4  35-43.