BUSINESS TIPS: I made it through the recession and now I'm adapting - How to steer your business through boom and bust

By DANNY WATERS

Updated: 09:10 EST, 11 July 2014

Danny Waters, CEO of Enterprise Finance, experienced the full force of the recession first-hand. He joined Enterprise Finance in 2004 when it was part of the Enterprise Group, a firm with a strong focus on the soon-to-be-doomed mortgage industry.

There are very few businesses that escaped the credit crunch and subsequent recession totally unaffected - it was felt by companies of all sizes and from all sectors.

A lot of companies that were enjoying roaring success pre-2008 saw the landscape change dramatically. The great bull run of the noughties came to an end rapidly and in spectacular fashion.

Boom and bust: How to navigate your way through the harder times

For us, back in 2007, things were good. Enterprise Group was ranked the 31st fastest growing private company in the UK by the Sunday Times Fast Track 100 list, and had recently secured an £8.5m investment.

However, in 2008 the sub-prime mortgage market, on which much of the company’s fortunes had been derived, dried up.

In 2009, Enterprise Group and its subsidiaries Enterprise Broker Services and sub-prime mortgage sourcing system, Edge V2, were placed into administration. But Enterprise Finance, its bridging and secured loan brokerage arm, remained profitable so I decided to lead a management buy-out.

It was a hugely challenging time. Although Enterprise Finance was profitable, the profits being made were negligible compared to 2007 and I was forced to scale back the business significantly and keep overheads ultra-low. It was a brutally challenging time.

 

Fortunately for us, in 2010 the bridging loan market, a form of short-term property finance (see video below), really started to take off and Enterprise Finance, a distributor’ of these specialist loans, once again started to grow.

In February of this year, we received a significant investment from ISIS Equity Partners, in a transaction that valued the business at £28m.

In the early summer, Enterprise Finance was once again named on the Sunday Times Fast Track 100 list – so we have come full circle.

What did I learn about business from the boom-bust years?

Although the outlook has improved, economic uncertainty has been the order of the day for businesses during the past six years.

Having experienced boom, near bust and back again, here is my advice for firms attempting to navigate their way out of the lows and, just as importantly, adapt a business model for the highs:

Keep an eye on your cost base

Regardless of what sector you operate in, you need to constantly assess your cost base and try to find ways throughout the supply chain to alleviate stresses on cashflow. When times are tough, this is even more important.

Scrutinise all of your outgoings and cut back on any unnecessary or discretionary spend. If you’re trying to revive a struggling company, any costs that can be avoided, should be avoided. The money you free up can be invested in growing the business or kept as contingency.

Good recovery: Danny Waters

Stick to what you’re good at

Have faith in your expertise and passion.

If you believe your business has the potential to recover in a more buoyant market, focus on staying afloat during the hard times while carefully planning for the next phase.

Understand your core capabilities as a business and identify the areas of strength – this is where you should be focusing your time and energy.

Don’t be afraid to tweak your business model if you see an opportunity but don’t over-diversify in order to enter new spaces.

In your sector you may be an expert, but when entering another market, you will be in competition with those far more established than yourself. Keep things simple.

Monitor the market

Watch what is going on around you at all times and stay vigilant to changes in the market.

Often, when one door closes in business, another opens. For example, in 2009-2010, despite mainstream finance drying up, bridging loans were becoming more relevant to the changing economy and we really focused on building up this side of our operations.

Also, for many firms market volume is key. Look for opportunities to secure partnerships that generate large volumes of business. One relationship with one company, organisation or network can prove far more profitable than countless individual relationships, which can require far more time to source and maintain.

Source additional expertise

Sometimes it’s hard to see the wood from the trees and bringing in a fresh pair of eyes can highlight key issues you may have missed. Especially in smaller companies where the founder may have to wear an array of hats – from marketing manager to FD - an external specialist can inject some much-needed strategy.

Remember, reputation is everything

A business is built on its reputation and although it can take years to build up, it can be ruined in a matter of seconds. If you have a reputation for being good at what you do and have built strong relationships with clients, you are much more likely to retain their business. Focus on offering excellent service at every level and in each division of your business and the rest will usually follow.

What next?

Psychologically, business owners need to adapt to changing market and economic conditions. Otherwise their firms can quickly lose relevance.

So take time out to study the market you are in. You can't bill for that time but in the long term it can pay sizeable dividends. Also, don't jettison principles and ways of working that have served you well until that point. But consider adapting them, even if it takes you out of your comfort zone when the economy improves.

Ask yourself does your brand tie in with the economic climate? And could it benefit from a revamp to reflect the new tone of the market?