Like a Virgin

SURVIVING A DOWNTURN

Having recently started out my seventh decade, I am old enough not to take a major recession lightly; on the other hand, having seen them before, I’m getting a feel for the market’s cyclical upturns and downturns.

Each generation of politicians and economists tries to flatten the cycle of boom and bust, and every one of them fails to pull it off. So, I think it’s time for a new approach: keep in mind that the economy has its ups and downs, and, by investing wisely, you can reduce the damage a downturn can do to your business or career.

Knowing what I know now, if I could go back to the beginning (and was interested solely in maximising my investments, which I’m not), I would invest only during recessions, when almost everything costs 50 to 90 per cent less than it does during boom times. This would be good for me as an investor, and the economy would benefit from the investment.

This is hard to do for two reasons, first because the economic cycle is slow-boom to bust can take a decade or more. We would have to learn patience. And the second reason is even more challenging: entrepreneurs have to respond to ideas as well as to the market.

There are times when an idea is ripe, but the market is wrong-a situation many entrepreneurs find themselves in right now. What should they do? Simply shrug their shoulders and walk away? Of course not: we can’t just kill our entrepreneurial zeal with the touch of a button.

The answer is think big, but build small.

Create something you’re proud of, but don’t let it swallow you financially. You don’t need to slather money over a good idea. A good idea will grow by itself. For years, private space programmes consisted of daring engineers in the middle of the desert attempting to launch one rocket after another. Today, thanks to aerospace engineer Burt Rutan’s brilliance, the team at Virgin Galactic is working on the world’s first feasible space tourism operation.

For all the misery the current recession has caused, you can be sure that fortunes are being made. There are big opportunities out there. Big homes that were worth five million are going for half that. Divide some big, handsome homes in university towns into good-quality student accommodation and-who knows?-you might soon be able to afford that big country house you always wanted. Which, by the way, is also now on offer for a fraction of its peak price.

The idea should be simple-simple enough for an individual to turn it into a reality. Small, lean entrepreneurial companies are the future of business.

Not everyone is an entrepreneur. If you want to find out if you have what it takes, save your experiments for evenings and weekends. If you have a secure job, now is certainly not the time to hand in your notice unless you’re absolutely certain that you have a brilliant idea. People on a salary will suffer relatively little during a downturn. Wages may well be frozen, or even reduced, but since the price of many things is coming down they will not be hurt much.

The prospects for people who lose their jobs are, of course, much worse.

If you are an employer, be aware that lay-offs are bad for business. The core of any company is its talent, its expertise and its relationships. Letting employees go must be a last resort. At the beginning of the downturn, we asked the chief executives in the Virgin Group to explore every avenue-from job sharing to reduced working weeks to wage freezes to unpaid leave-before they laid off staff.

And what if you’ve lost your job? Not long ago, a journalist asked me what my advice would be to the newly unemployed. I pointed out, as gently as I could, that there were many people better qualified than me to answer that question. But there is one thought I will share.

If a company had just let me go, I would look for ways for that very business to save money. All businesses-whether they’re booming or busting, young or old, big or small-need to save money. If your office has an account with an expensive cab company, then find one that undercuts it. It burns regular light bulbs? As you take that slow walk to the lift, count the bulbs. Do the math. Show them the savings they could make by switching to energy-efficient bulbs, offer to make the arrangements and ask for a cut.

Many small entrepreneurial opportunities are there for the taking. Most have to do with saving energy. If there’s one thing we know for sure, it’s that fuel is going to get more expensive and probably sooner than later. Many companies have yet to understand that an ailing business can be boosted simply by reducing waste and using energy more efficiently. Most businesses have no idea how much money they’re flushing away on unnecessary document printing, lights that stay on 24/7 for no reason, windows that could be cleaned half as often, energy-hungry office machinery, and pointless travel and shipment costs. Like when people say, ‘I’ll messenger it over right away’ and it’s something that doesn’t even warrant the cost of a fax.

You worked there so you know the problems. You witnessed the waste for years as the money was burned but it was never in your remit to do anything that would take a cost-culture shift. Now’s your chance to make a pitch-offer to do it for a percentage of the savings so they have nothing but upside.

Not every cloud has a silver lining but some of them most certainly do, and it takes a certain kind of rainmaker attitude to find which ones are which.