As a venture capitalist or private equity firm, you know that making the decision to invest in a young business is not always easy. On top of the fact that 90% of startups fail, market experts are predicting a recession. However, there are several reasons why you should invest in your portfolio of businesses now during these uncertain times. In this blog post, we will discuss five benefits of taking an offensive approach when many business leaders and investors are withdrawing into defensive mode.
1. Talent Management:
Today, layoffs and a massive pullback in hiring have led to a more talent-rich pool that’s up for grabs. Advise your CEOs to seize this moment to pursue outstanding people that fit the company culture and needs. Even with an influx of candidates, finding and hiring top talent on your own is becoming increasingly difficult (and expensive). By investing in resource management now by hiring an expert and affordable recruitment firm, you can take advantage of the current talent market and set this business up to be even more competitive in the marketplace.
2. Process Optimization:
Investing in process improvement can help streamline operations and improve the bottom line. Hire a consultant to advise the company on how to increase efficiency and save money in the long run. With a looming recession, this is a smart tactic based on simple math — your return on investment will be better than making mere cuts.
3. Product Development:
Take the necessary steps to realize your startup company’s long-term product vision. With the current economic climate, it’s more important than ever to have a differentiated product that meets customers’ needs. A strong product foundation is essential in weathering an economic downturn, so make sure customers choose your company’s product over the competition.
4. Mergers and Acquisitions:
In an industry with consolidation happening all around, it may be time for you to consider a company merger or acquisition. With many businesses struggling right now, this is an opportune moment to buy up talent and market share, with many businesses willing to sell at a discount.
5. Raising Capital:
While it may seem counterintuitive to raise capital during a recession, this could actually be the best time to do so. Investors are more likely to put their money into companies they perceive as “recession-proof.” If you can show them that your business is prepared for tough times, you’re more likely to get funding. With current market conditions, you can also raise capital at a lower cost.
Now is the time to invest in talent management, process optimization, product development, mergers and acquisitions, and raising capital. By taking an offensive approach during these uncertain times, you can position your portfolio for future success against the competition. Overall, use this time to find a way to stand out and be different from the rest!
If you’re looking for more information on talent management or how your company can build an ace global executive team, contact us at reesmarxGLOBAL.