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3 February 2009 | K2 Partners
Complacency
Too many businesses are putting off decisions that need to be taken if they are to survive. While there is no evidence that Nero fiddled while Rome burned in AD 64, there is plenty of evidence that business leaders today are ignoring the harsh reality of recession.
While economists cannot agree on a timeframe for recovery, nor on the level to which markets will recover, it is unwise for businesses to bet on their markets picking up in the medium-term, let alone stability. Therefore leaders are left with having to change their business model.
The challenge is to decide how drastically to make cuts and other changes. Cutting capital expenditure, marketing budgets, training and other investment related spending is relatively easy, however closing offices and factories, and making redundancies is more difficult. There is normally a considerable cost associated with making drastic decisions. In spite of any fear about consequences, such decisions cannot be put off without placing survival in jeopardy.
The principle for distressed investments that "the early loss is the easy loss" also applies to distressed businesses "the earl action is the easy action". Too many business leaders are not taking the measures needed to survive.
Excerpt from the K2 Turnaround Times Edited by Tony Groom
February 2009