Are we free of the recession?

Who really knows? Create your own story and use a crisis to provide the best lessons says Stirling Murray

Who really knows? Create your own story and use a crisis to provide the best lessons says Stirling Murray

In case you hadn’t noticed we’ve just lived through the worst recession since the Great Depression in the 1930s. I wasn’t around then ­– please take my word for it, I wasn’t – so can only judge the comparisons made by the press and the financial community. And if anybody thinks the last two or three years weren’t that bad please let me know what you’ve been smoking because I could do with a bit of whatever you’re having.

This has been a shattering recession for the UK that has some way to play out. The figures say it all: from the mundane – Thompson Holidays with 650,000 unsold holidays by mid-August – to the truly scary – with youth unemployment rising by more than half again over two years, leading to fears of a lost generation who will never know regular income and work, and some areas of the UK so blighted that 20% of children live in a family where nobody works.

And the worse thing is, as from the first rumblings in August 2007, nobody really knows what is going to happen or when the end game is likely to be played.

Pick up any financial commentary or business paper and be amazed at the contradictory reports often appearing on the same page. The Daily Telegraph’s business section on 25 August 2010 carried the apocalyptic headline ‘Markets suffer global sell-off’, with plenty of fear inducing comments explaining why. “Global growth is undoubtedly faltering and the outlooks for the major advanced economies is pretty poor,” stated one expert. Home sales in the US fell by 27% in June to their lowest level in 15 years, causing another expert to say “investors are becoming increasingly concerned that the US and western Europe will move to a Japanese scenario with low growth, low rates and an ageing population”. So not much to worry about there then!

Stirling Murray, founder of The Red Tree

Turn to the back page of the same paper, same date and read what Sir Martin Sorrell (chief executive of the world’s largest advertising group, WPP) says about his business in the US where revenues grew by 8% in the second quarter of 2010. WPP has never experienced “a more speedy recovery or turnaround of a region” than that seen in the US.

I take it that WPP is talking about the same US (there isn’t another is there?) that as described on the front page makes me feel like we should all extend the weekend to Wednesday.

And now this contradictory and confused state of affairs has promoted economists to come up with a new phrase to describe the economic roller coaster we’re living through – we’ve had Us, Ls, Vs, Ws, and we are now into a ‘LuVVy’ recovery. No I haven’t got a clue either.

So what’s going on and how can you learn from this?

Firstly there isn’t anybody who truly knows how things are going to progress. Can I share a secret? They never did! So you may as well be positive and create your own story. Thankfully we inhabit a business sector where this attitude is alive and kicking – always has been, always will be. There is a never-ending stream of new brands, ideas and entrepreneurs willing to make things happen. Even with the recession our brand distribution business, Every Cloud Beauty, has been approached by more brands seeking a distributor for the UK and Europe than ever before.

Secondly there is increasing polarisation of the beauty and personal care business. Fact: the big guys are getting bigger and although the recession may have hurt them (some of the downturns in revenue in 2009 were astonishing in their scale), they have deep pockets, global revenue streams and can cut costs without too much pain, though it’s a very different story for those employees that suffer as a consequence. In the UK there are only a handful of companies occupying the middle sector. But there is an ever increasing number of companies at the smaller end that don’t have credit lines, can’t cut costs or headcount and continually worry about cash flow. But what they can do is dream, create, grow, find crazy solutions to what seem like intractable problems, do things quickly, break rules and confound everyone with their success.

Thirdly, as everyone tells me, you learn more from difficulty and failure than you do from success. No crisis should ever be wasted say others, so here are some of my lessons from the past three years:

1. Always make sure that others understand what your business is about

You must have the simplest of answers to the question ‘what do you do?’ It is never enough that you believe YOU know. Others are the only measure of how clear that answer is. The articulation of what your business is about, what function it fulfils and what it does has to be clearly understood so that others can explain it to their contacts with ease.

2. Everything takes longer than you expect

Everything, but everything takes longer than you think and if professional advisors are involved then double the time you think it will take. You don’t need to give much thought on why that is true.

3. Bad decisions beget bad decisions

If a decision is bad in the first place then by some twisted law of logic, unless you correct the mistake all other decisions that follow will only make things worse. It’s like a screw that’s missed its thread – you can only correct its path by removing it. Or an elastic band that has been twisted round and round and round. The elastic band becomes so knotted that it becomes something else and can’t function as intended. If your business has taken the wrong route with people, or product, or diversification, or acquisition, get back on the right road as quickly and as cleanly as possible. So how can you tell if a decision is bad...............?

4. Trust your gut instinct

Every time over the last three years I chose to ignore my gut instincts – doubts that are deeply and subtlety felt on a subconscious level and seem to arise from your stomach (hence the term) – but still went ahead with the decision then the results were poor. I don’t know if this is because you thought it wrong so you make it wrong (to prove yourself right?) or whether there is something wider at play. This can all start getting heavy and there is masses of academic work and research on gut instinct. All I know is that if I chose not to listen to my inner voice and made the wrong decision then see point 3.

5. At times it is wise to go with the flow

There comes a time in all business situations when your efforts can no longer have an impact or make a difference. At this point the best policy is to relax, stop worrying, see what unfolds and move on to solving the next problem. This isn’t being passive, nor is it abdicating responsibility. It’s the realisation that you cannot control everything, that you cannot push water uphill and if something is going to happen it will or it won’t. This doesn’t imply that you no longer take action but having acted to the best of your ability (and don’t fool yourself if you haven’t because then you do need to do more!) you stand back and see what happens. Not to do so can only drive you mad with worry and frantic wasteful activity. Better to grant yourself permission to go with the flow and let the current take you along than to cause everyone around you to panic.

And finally... lots of people also tell me I should stop supporting Arsenal as much as I do, but as we’ve seen there are limits to the wisdom of others.

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