Episode 12 - How Great Businesses Adapt

Change is constant, but the best businesses know how to respond. In this episode I look at how businesses adapt under pressure, why timing matters, and how owners can create more options for the future. 

Transcript

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Hi everybody, thanks for tuning in to episode 12 of Privately Listed. Do you lay awake thinking about what would happen to your business if the market shifted overnight? I think a lot of people do that. I've spent much of my career around businesses never getting change across various markets. And the patterns are always clear. The ones that create options early are the ones that stay valuable later. In this episode, I want to talk about three things. I've seen time time across many businesses. One, how great businesses adapt under pressure. Two, why timing can change everything, and three, how owners can build real options for the future. Let's firstly go into how great businesses adapt under pressure. This often shows up when change is out of their control. Tariffs can cut off major export routes, supply pressures can change the economics of manufacturing, and shifting conditions can force businesses to rethink where and how they operate. You don't look for it, but it just hits you in the face. Strongest businesses don't panic, they stay nimble, they look for new markets, and they understand that trade and policy conditions will change again with the change in governments. When entering a new market, they also know that the value of partnering with a credible local group before taking the next step. Often cost pressures are high, or you know, your revenue, your revenue's been cut off in one specific country, and you've got to go and find gear up in another country. You can't do that on your own, particularly in Asia, where I've I've lived and worked for a long time. All of the the 15 or 16 countries of Asia have different cultural and regulatory nuances, and you know how to you need to know how to partner on the ground if you want to start. You can't just walk in there and go, hi, I'm I'm here. Can we start again? You also want to test with you want to test and incentivize the people on the ground to know that you're working with the one with the right group because they're again there are different ways of doing different business business in different countries, and and that's that's for another episode. But they're very different. Most of the countries now are modernized, and they are all uh easy to get into and to navigate, but you still really want to work with an established operator on the ground. And and and it if it's been forced on you, then it's an option that you've you've inevitably got to take. There are other instances where I've worked with major global manufacturers and and distributors, uh one in particular, uh, who had all their products manufactured in one large center, and like everybody, there was cost pressures. They thought, okay, we'll go and try another country to do manufacturing. That lasted about 18 months. They saved money, but the product just didn't make it up to the required specifications. The company knew that, and the first thing that happens is your clients tell you because they know how good your products were being manufactured before, and now they're saying, well, these well, you're getting these made somewhere else, they're not as good. They had the foresight to to, after that eight months, to move back to where uh they were originally getting the product manufactured from, and it worked. And the country that was the one in the middle has subsequently become an excellent manufacturing uh country in Asia, and it just takes time. They all develop like people, they all develop at different times. I've seen businesses that innovate with new operational systems and processes, and that brings efficiencies and allows you to sustain yourself, and often then that creates opportunities to diversify and move into uh you know other uh bolt-on other industries or or other groups with synergies. Things like changing packaging to be more optically appealing or sustainable can have a huge impact on customers and even your your own cosplay. Everybody's visual, and sometimes you think, oh, I'm meandering along and you know, I don't know how to well, I don't know what to do next. But just by changing the artwork on your coffee cup or on some of your designs on on the products that you have, people go, wow, that's really cool. Sustainability always works because it is in the back of people's mind. Maybe it's tapered off a little bit because you know it's been it's been done to death, but it's still good. If you've got a sustainable product and it's optically appealing, you know, you might bring back existing customers that have fallen off, or you might attract new customers. But forward-looking businesses, uh business owners, they you know they look to acquire businesses with synergies or businesses that provide diversification options. And and I've I've worked with many that that do that. And the and it all owners are worried about you know, how's my marketing going? How's my team going? Where's my revenue going coming from? How do I raise capital? You know, and I have a vision and a strategy. You can't do all that. You need people in your team or advisors that can help you look at things that you might have missed. Really good really good business owners and operators, they are constantly thinking about ways to change the and diversify the business model. But you do need to have good people around you to do that. Two, why does time what why can timing change everything? Well, you could be involved, I'll give you an example here. You could be involved in in an industry where the government just regulates it or changes something, and all of a sudden you look in the mirror and go, okay, well, that's 50% of my revenue gone, or more. And I'll give you an example of that. Let's talk about education. There are changes to education in various forms in the UK, and there are changes to immigration in Australia. Again, ongoing, taken back, added, new ones, does everybody's heading. But if you're providing educational facilities around, let's say, for example, student visas, and then the government cuts a number of students that are coming in to the country in a particular time frame, your business model's endanger. You just had your revenue cut off. So what you can do is look to roll up different educational facilities under a larger umbrella, and it will work. And and it might be a change to uh these things might be changes in well, I said student visas, but things like in age care, in disability health care, all sorts of things. Market condition conditions just shift, but you can roll up under an umbrella and then diversify your business model. So you don't have to just do student visas, you can do other sorts of education, things like or other other, you know, different places to do a put aged care facilities and and diversify across that. And and so it's it's a case for uh you know creating momentum whilst you're dealing with frustration, but timing can change everything. How can owners build real options for the future? From the my experience, the best businesses create optionality. One of the best examples that I saw, which I still think about it a lot of the time when I'm working with healthcare organizations, is that in Hong Kong, and this started quite a few years ago, it's obviously space is at a premium, it's expensive, and people are all time poor. But groups started to buy out whole buildings and own the the you know the sixth floors, seven floors of the building, and in there they would put a doctor, X-ray, CT, MRI, physio, and a pharmacy. And the model works really well in places like Hong Kong, but it also works in places like regional Australia, where people want to go uh and get it all done because they've got to drive there and it takes time and they want to get it all, have a better value proposition and have it all done in in an hour and a half. If you can get all that stuff done, plus get your pharmaceuticals in an hour and a half and go back to work, it's it's pretty compelling and it's good in your head, right? And it's fantastic for the business owner because they've diversified and captured all the revenue streams under one building. That's a that's a compelling example. Others might be when you create, and I've worked with many organizations, they've created fantastic distribution channels in whatever country it is in, and whether it's in food or it's in uh liquor or spirits, fantastic. You've created a distribution down restaurants, convenience stores, supermarkets, pubs, all sorts of things. You know the market because the people that stock they only stock stuff they know moves. And in most countries, if your stock doesn't move, it's it's not taken on. That allows you to create your own brand. And I've seen uh really switched on groups do that, and I've worked with a number of them. They all of a sudden go, I've got a chance to create my own independent brand, which I know will work down these channels, and that's a diversification that and an optionality that a business owner can bolt on. I've also seen it in retail models where people have thought outside the square. So they build, again, FMCG is a good example, they'll build franchise models and consistent revenue streams, and down one side of the road the business will be called ABC, and on the way back on the other side of the road, it'll have a different name and it'll be called XYZ, but it's on it's owned by the same operator. It will generally have the same products, and people will probably know all this, but it but it's a model that is accepted. In regional areas, it works really well because the franchisees understand what the local residents want to eat or drink. And so, but it's just you don't have to call every store the same. Corporate uh businesses can't really change their business models. Independent uh businesses can change. Uh you know, franchise businesses, independent businesses can can change the stock to what the consumer wants. We're also seeing this in in another way in with the emergence in the cosmetics and wilderness industry of independent brands. And this is again as the expense of the larger corporates who have been around for a long time and everybody identifies with brands, but people want to be cool. People want to go to dinner or go to a bar and go, hey, look what I've got. This is cool. And when you're uh a business owner, the the independent brands allow you to be more nimble, they allow you to customize uh quicker, get faster to market, and you know, with the advent of influences on and and social media, people pick up things very quickly. Whether it sticks and sticks or not, longer term, a lot of that is built around uh you know the success of the brand and whether whether people feel comfortable using. For example, people that try cosmetics form their own opinions pretty quickly. Yes, they're influenced by somebody, but people who put things on their faces or their or their or their skin, they know whether it's working or not. So, but uh from a business owner's perspective, that optionality of bolting on you know new brands, independent brands, and and creating different experiences for for customers, it might be it might be doing new artwork on your coffee mug. It might be making it a sustainable coffee uh cup with new artwork and it might be sponsoring the local sports team. But you just need to think about how I can expand and grow my client base. You know, trust and and loyalty is what keeps businesses going, and it provides a platform for you to be able to expand and diversify where where you when you want to do that. And there are a lot of options, and I've worked with many of them. But I want people to take away simple messages that the best businesses do not just survive change, they prepare for it and they adapt under pressure. They respect the timing and they build options that give them more control for the future. Thank you for listening to this episode. It's only a short one, but if it resonates you or if you've got any questions or you're thinking about how to adapt, grow, or create more options in your business, feel free to email me at heyjame at private minister.com and I'll look forward to speaking with you. Thank you.