ABERDEEN has been fortunate to avoid the financial crisis that struck the rest of Britain six years ago but the city now faces a significant downturn, following 30 years of oil and gas triumphs.
I read a report recently – Fuelling the Next Generation - A study of the UK Upstream Oil and Gas Workforce – that predicts that a total of 35,000 jobs will be lost by 2019 as oil exploration and recovery operations decline, and new fields become more difficult to source and commercially exploit.
It has also been estimated that more than 1,500 companies are operating within the energy sector in Aberdeen and surrounding areas, working together to generate the £57billion in tax revenue forecast by the Scottish Government for the period 2012-18.
But, contrary to popular belief, Aberdeen isn’t just made up of lucrative oil & gas giants.
I work with clients from small, medium and large enterprises spanning across a range of industries from construction and agriculture to banking and consultancy; each as determined as the next to survive and thrive in this unpredictable climate.
Not all of my clients’ operations are impacted by what is happening in the oil & gas market, but a significant amount of them get the spin-off that a buoyant and strong energy sector creates, or are directly servicing oil & gas companies.
But when corporate giants are struggling, how can SMEs be expected to thrive?
I believe the secret is innovation and evolution; the businesses that can adapt the quickest, and most effectively, will reap the rewards.
When I meet with clients I ask them to take a step back, out of panic mode, and assess their business aspirations and strategy.
Downturns present businesses with a dilemma - to cut costs to conserve resources or to invest in new products and services to exploit competitor weakness.
In Scotland, businesses that work in the oil & gas industry have to act quickly to reduce costs as the oil price plummets.
This then affects the SMEs that sell to, or serve, the industry – from the IT suppliers to marketing – instigating a domino effect.
To counteract this effect, it’s important to ensure the business strategy is malleable and proactive, predicting industry movements to get ahead of competitors.
Surprisingly, being an SME in a downturn can be advantageous – as a small business, it’s likely to only have a small percentage of the available market.
The bigger businesses tend to suffer more dramatically and have to make major cutbacks to continue.
This is a prime opportunity for SMEs to showcase exceptional products and personable customer service.
Clients approach me looking for simple, straightforward advice.
Every business is unique but as a starting point, they may want to look at a five-step guide that can be applied to any SME.
The first step is to analyse the current service and product offering – look at the industry each product is servicing and whether this could be expanded upon.
Are there any niche industries that could be worth exploring? Use this as an opportunity to expand into new markets with new and existing products.
Step two is about relationship building - invite prospective clients for coffee, or have an informal discussion over the phone; this exercise will strengthen potential new business opportunities.
Next step is to focus on the positives – in times of austerity it can be easy to fall into the habit of cost-cutting rather than actively applying revenue-generating activities.
Inspire the team and spend time on sales and marketing.
Practise self-promotion by publicising all of the positive work an SME is doing which will act as a refreshing change for news full of job cuts and closures.
Sometimes cuts are unavoidable but try, where possible, to start small.
Look at expenses closely – is there anything that could save the company money but will not compromise on revenue-generating activity?
Try cutting back on any extra luxuries that are not essential.
And finally, I believe it’s really important to try – where possible – to keep up staff morale.
Take a moment to brainstorm future-proofing ideas together.
Actively initiating team-building activities will encourage staff collectiveness, unity and responsibility.