Finding Growth in a Stagnant Economy

Find out how to invest in your business without breaking the bank, at a time when many business leaders instinctively freeze.

It can be hard to create concrete investment plans for your business in what many call a stagnant economy. Leaders often respond by becoming more risk-averse, resulting in restricted spending and forward planning. Unfortunately, these behaviours can make the overall economic picture worse, rather than maintain the status quo, as was originally intended.

Why standing still means falling behind

Business leaders will be familiar with the concept of inflation; the rate at which prices rise for a particular product over a certain period. A positive rate of inflation means that over time, the same amount of money will buy you an ever-reducing amount.

Where many of us go wrong is that we think our businesses will hold their value if we limit investment and aim to maintain the status quo during a difficult economy; the reality is that businesses are essentially subject to their own form of inflation. If they tread water, their real power and potential will actually reduce over time.

How?

The hard truth is that the world will continue to turn while we try to keep things as they are. Technology moves forward, consumer behaviours change, and government behaviour changes too. To stand still is to effectively depreciate, or even decay, our businesses. We would be indirectly creating a situation where we leave ourselves worse off when the economy starts to rebound. What happens then? We get left behind, while those that invested get to grow at a faster pace.

But what if you don’t have the means to invest during a difficult economy? The answer lies in revisiting our definition of investment.

Reframing our thinking

Investment is often thought of as spending money to create new wealth further down the line. While this is correct, it is also a somewhat limited view on what constitutes investment. I prefer to remove the words “spending money” and replace them with “doing something.” Anything we do can be considered investment – we just need to target our activities effectively.

Take the widespread growth of generative AI models available for use. A service-based business may find itself in a period of slow growth, and therefore has limited funds to grow their products, services and operations. The CEO notes that more and more companies are turning to generative AI to produce work. Instead of finding ways to spend money to grow the business, they opt to create a small project team from the existing workforce to dedicate a few hours per week into researching the GenAI market and identifying ways in which it could help their business. No money needs to be spent – the existing resources of the company can be used to complete the task.

Six months later, the team presents their findings and recommends the adoption of a particular GenAI model, along with a series of implementation measures and safeguards. By this point in time, the economy has rebounded and the company has more funds at its disposal to implement the project team’s recommendations.

The business is now much stronger, because it chose to invest time.

Reviewing the status quo

An option available to all businesses is to spend some time looking at their existing operations. Many will jump to the conclusion that this means reducing the size of the workforce – if you want to grow when the economy rebounds, this absolutely is not the way forward, for (hopefully) obvious reasons. If it is your only option, then the reality is that your business can’t tread water, it’s in a worrying position, and that indicates deeper structural issues which need tackling separately.

An operations review focuses on several areas, but the largest element is likely to be productivity; how can we achieve more with the people and resources we already have? Worker productivity in the United Kingdom is comparatively low compared to many other western countries, and this issue has persisted for quite some time now. There is clearly more we can do as business leaders to improve productivity.

Avoiding the ‘lazy worker’ trap

Many equate low worker productivity with laziness in workers, but this couldn’t be more wrong. There are many factors that influence productivity per worker: use of technology, managerial decision-making, government regulation, even the health of the workforce. Yes, workers can underperform, but my many years as a people leader have taught me that in most cases, underperformance is a direct result of poor training and onboarding, and most of all, undeveloped or inappropriate leadership.

This makes the skills of your leadership team a great place to start when you’re looking to invest in your business during a difficult economy. If you improve how your leaders think and operate, their team members will perform better as a result, and your productivity levels will measurably improve. Furthermore, if you encourage both leaders and team members to work together to identify improved ways of working, you can streamline your processes and create new opportunities that you may not have noticed before.

New possibilities

A turbulent economy does not necessarily mean trouble, nor is it a good enough reason to try and put the growth of your business on ice. By reframing your definition of investment, and by reviewing your day-to-day operations, you can set your business up to accelerate when the economy improves, and even find new value in the meantime.

The best time to prepare for growth is when others stand still.

If you’d like support in reviewing your operations or identifying low-cost ways to invest, get in touch for a free consultation.