And, when market conditions decline and the economy tightens, then that adage is even more relevant. In conditions like those we are currently experiencing, it is critical that companies take a long, hard look at their business, focus on their core attributes and develop ways to enhance that service or product to ensure it remains essential to customer needs.
In that way, adversity can be turned into opportunity. The history of recessions is littered with examples of clever, forward-thinking businesses that have used a downturn to create opportunities for growth as well as those that have continued to ‘always do what they always have’ and gone under as they have failed to adapt to a changing world.
Those who adapt often find that new ways of working, as a result of a tightening economic outlook, lead to increased efficiency, a more motivated workforce, leaner operating methods, enhanced products or services and a greater focus on client service.
In many cases, the UK’s ranks of SMEs are already implementing this policy and finding ways of adapting, diversifying or developing their businesses in the recession. According to recent statistics , the number of SMEs diversifying into new services and produces has increased to 26 per cent (from 17 per cent in Winter 2011/12).
Others wishing to capitalise on the busy summer of sporting and other events, such as the Jubilee celebrations, have introduced more short term initiatives such as increased trading hours and special discounts, although whether this will help in the long term is yet to be seen. But at the very least it shows an ability and willingness to change.
The full impact of the UK’s sporting summer on our economy is still unknown, although the result of the Olympics and Paralympics is expected to increase consumer spending by £804m .
It’s debateable whether this actually benefited the rental sector as early indications suggest that tourist held back from travelling, particularly into London, due to concern with pricing and congestion.
Other than one major player, all the leading vehicle rental businesses are ultimately publicly quoted companies. Naturally, this leads to increasing pressure to deliver in line with shareholder expectations, not an easy place to be especially when coupled with unfavourable market conditions and unpredictable customer demand which is further compounded by the inability to “downstream” significant vehicle cost increases.
To add to the challenge, the strategy of vehicle manufacturers has changed restricting supply quotas to the industry while in the ‘consumer’ channel, insurance premiums and fraudulent accident cases have escalated across the board. Escalating fuel prices and the subsequent reduced demand across corporate travel, fleet and the insurance replacement sectors further compound the issue.
The challenge is, as with all business sectors, how to maintain market share and margins.
As I mentioned earlier, adapting is key to survival. Restructuring to the overhead base in order to make savings is required, as are improved systems that will support new initiatives, working practices and products.
At Nexus, we are continually investing in our technology to further enhance and extend the service we can deliver to our customers (while alleviating the need to increase headcount), and become a true SaaS (Software as a Service) company. In that way, we help our clients to build better, more profitable businesses.
From the marketing and business-capturing front-end portals through full middle and back-office solutions, our systems provide a seamless platform to manage every aspect of vehicle rental, with maximum effectiveness.
Through this technology, we are able to drastically increase our customers’ time efficiency when booking as our systems undertake all the necessary research instantly. Our advanced systems and increased efficiencies keep overheads minimal for both our customers and ourselves as, while our company grows, the software is adapted meaning we aren’t required to increase manpower – Nexus was listed as number 42 in this year’s Sunday Times Profit Track 100.
Adaptation and restructuring must also look above the internal parapet and include external growth strategies. While this may not be relevant (or financially viable) for some companies, acquisition can be a key strategic ingredient of success in growing a business and expanding into new disciplines and recessions often present attractive opportunities to acqure,. In 2010, Nexus acquired Adapted Vehicle Hire Limited which strengthens our core offering by securing a key niche supplier for a sector that is growing in importance as a consequence of disability discrimination legislation.
The smart businesses must take every opportunity to differentiate themselves and introduce innovations wherever possible. As in the animal kingdom, it is survival of the fittest!