Undeterred by the economic crisis, more than two-thirds of the "world's best entrepreneurs" are pursuing new market opportunities, a global survey has found.
Entrepreneurial companies with an aggressive acquisitions-oriented approach are divesting their non-core assets and looking at raising further capital from shareholders or the market, even as most multinationals are more concerned about retaining their present position, showed the survey, conducted by Ernst & Young (E&Y).
What suggests the presence of sufficient cash reserves is that many of the entrepreneurs said that generating cash in the next 12 months was not an increased priority.
Optimising activity towards a widening customer base along with effectively dealing with "customer pain" is a priority, with successful entrepreneurs, said the survey.
The survey 'Seizing Opportunities: redefining growth in a turbulent economy' was conducted among 3,100 finalists of Ernst & Young's Entrepreneur of The Year programme selected from around the world.
"Despite current pressures, 40 per cent of surveyed entrepreneurs have not increased focus on cash generation from operations and reshaping their business is not a high priority. This indicates that they have sufficient cash reserves or can access alternate sources of cash to approach opportunities," said E&Y.
Inspite of the recession, entrepreneurs said they were seeking opportunities for strategic growth and focusing on positives.
"To withstand the downturn, entrepreneurs are optimising activity in six areas – customer, transactions, people, operations, finance and risk. They realise that some customers will fall away during tough times and 80 per cent are increasing focus on re-negotiating contracts and managing customer bankruptcy. Their approach to transactions is to cautiously raise capital, renew their focus on seeking mergers and acquisitions and divest non-core assets to realise capital," said Michael Hasbani, Head of Strategic Growth Markets, Ernst & Young Middle East.
"Seen from another perspective, the downturn has opened up space in all local and global markets. Companies that cannot adapt to the new circumstances will be replaced by exceptional enterprises that are better able to adjust to new realities," he added.
Almost 75 per cent of the multinational companies were more concerned with securing the present position and a high number of them were also concerned about protecting their assets.
In contrast, only 30 per cent of global entrepreneurs focused on securing present position and a majority, nearly 70 per cent, opted for pursuing new market opportunities, found the survey.
Sufficient cash reserves
E&Y said most successful entrepreneurs believe they can pursue their ambitions for growth only if their cash positions are secure. However, they did not see any increased focus on cash.
Almost 40 per cent of those surveyed said generating cash over the next 12 months was not an increased priority. "This suggests that many have sufficient cash reserves with which to approach the current challenges and opportunities," said the advisory firm.
This, E&Y noted, was likely to place them ahead of many of their peers and competitors who are trying to secure their cash positions.
The strong liquidity position provides the basis for a wider array of financial choices in order to build a robust business platform. When business conditions improve, these entrepreneurs can work towards broadening their customer base, acquiring strategic businesses, developing new products, services and markets, attracting and retaining people and driving their operational performance, said E&Y.
Entrepreneurs asserted on adopting creative and unconventional approaches in the current market conditions.
"This will be the key to pursuing our dreams and visions as entrepreneurs. We should never get depressed by the situation, we should always be brave and joyful in taking on the challenges," said the entrepreneurs. "It is times like this that the strong get stronger and the weak fall by the wayside. Focussed leaders with a sense of urgency to their execution will prevail, lead and be at the top of their industry," they said.
Managing risk
While retaining a capacity for risk, entrepreneurs showed awarenesss of the heightened dangers that have appeared in the world economy in the past 12 months.
There is a split over whether to increase or decrease exposure to risk – the majority have retained their encouragement and reward of measured risk-taking.
Whatever the attitude to the taking of risks, there is an overwhelming recognition that companies need processes to recognise and deal with problems before they can threaten the strategic direction of the company, said E&Y.
"Majority of surveyed entrepreneurs have retained their encouragement and reward of measured risk-taking."
The entrepreneurs opined that calibrating business strategy to market conditions should not be ignored. "Plan ahead, don't make rash decisions. Winning companies acknowledge financial concerns before they become a burden and make swift decisions when they need to be made."
Hasbani added: "The findings reveal a greatly changed global business landscape. This is a critical phase in any business cycle, where the recipe for success is to think different and act bold. Entrepreneurship is a great force for economic and social change. Entrepreneurs embody the potential that exists in all economies and societies.
Human resource
Cutting down on manpower was a step adopted by many organisations to cut down on costs. However, it is not the same for business leaders. As many as 89 per cent of the respondents were either retaining or increasing their focus on recruiting and rewarding key people.
"Entrepreneurs are concentrating on keeping their key people-the people that cannot be easily replaced. Investment in training, rewarding or acquiring the right people is a consistent message," said E&Y.
Adapting to new realities has driven entrepreneurs to bring in changes such as rewarding key people and increasing productivity through reduced costs, it added.
According to one of the entrepreneurs: "Respect your employees. I am a true believer that a person is only as good as their worst employee. By treating my employees as I want others to treat me, I believe there is equal respect given and taken. When a client comes to one of our sites, they see these things. Keep calm, stay focused and work as a good team."
Customer focus
Managing problems faced by the customers is as much a priority for the foremost entrepreneurs as is widening the customer base, according to a survey.
Widening customer base and entering new markets is an area of strong focus for a wide majority, said the survey conducted by Ernst & Young (E&Y).
While 93 per cent entrepreneurs in the survey said they ware retaining or increasing their focus on this aspect, as many as 80 per cent said they are retaining or increasing focus on re-negotiating contracts and managing customer bankruptcy.
"Seizing the opportunity to expand customer base and sharpen market differentiation is the top priority for today's leading entrepreneurs.
A strong focus on core niches in both new ad existing markets will ensure that resources are directed at driving the greatest value," said E&Y.
This also reflects that there is realism in their outlook. Some customers will probably fall away during tough times and procedures to manage these reductions or failures are being re-inforced, E&Y added.
"This is a market of opportunity. Focus your efforts on neglected or overlooked markets while also building customer loyalty. Those positioned accordingly will see exponential growth when clients and potential clients start to operate at capacity," said the entrepreneurs in the survey.
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