THE STATE'S leading chief executives gather in Dublin Castle next week to share their experiences and discuss the major issues facing their businesses at this year's CEO Forum.
One of the keynote speakers will be Patrick Coveney, chief executive of food group Greencore. Coveney plans to discuss what exactly businesses need to do in terms of strategy and leadership, not only to survive but to prosper in the challenging environment they currently face.
"While you clearly do need to react and make different, and often difficult, decisions when market conditions are tougher, it's more important than ever that you stay true to the vision and strategy and values that your business has, because frankly they get tested much more in difficult times than they do in easy times," Coveney said. Businesses must also accept that, given current market conditions, they're not going to be able to grow their way out of difficulty to prosperity in the short term. Instead they must tackle their cost base and eliminate waste in all forms, even though this might be a painful process.
"I think it'll be more important than ever for companies to focus on cash flow as the key financial measure, because in an environment where access to debt is more difficult and also more expensive, what you want to do is reduce your need to go and get external funding," he added. "And to do that you need to generate cash flows."
Despite the fact that conditions are challenging, business leaders must remain optimistic and upbeat, he continued. They should also bear in mind that many of the most successful companies in the world extended their lead over their competitors during difficult times.
Brian Long, chief executive of venture capital firm Atlantic Bridge, will share his experience of surviving tough times with Parthus, the technology firm he founded during a recession in 1993. He will also be looking at the opportunities than can emerge during a downturn.
One of the major pitfalls he will warn delegates at the forum about is cash burn. "Maximising profitability and minimising cash burn are fundamentally important here, because there is no liquidity in the market, there are very few investors and it's difficult if you run into a negative situation," Long explained.
Conserve cash, be frugal when it comes to costs and explore every option to reduce cash burn, he added.
During periods of recession, opportunities tend to open up in the outsourcing space as large corporations pare back, reduce their workforce and then realise that they don't have the "bandwidth" to carry out certain activities such as the development of non-core products. This creates opportunities for smaller players to step in and offer their services.
In addition it is crucial for chief executives to build a strong management team. "Good management can make the changes needed to compensate and adjust for any market change," he said.
Paul Kerley, chief executive of financial compliance software provider Norkom, will also be speaking at the forum. The main thrust of his address will be that businesses must be built to withstand global crises, which are becoming more frequent. In the last eight years, for example, the world has lurched from the bursting of the dot.com bubble to 9/11, the telecoms meltdown, the Iraq war and now the credit crunch. Building a profitable global business takes many years, Kerley says, "so you have to accept that these crises will come at you, and you've got to build an operating model that expects these things to happen".
Risk diversification is the key to surviving inevitable shocks. This involves spreading risk across product lines, clients and geographic locations, he explains, so that the business isn't overly reliant on any one product, customer or market.
He also stressed the importance of building up strategic cash reserves at times like this, despite the pressure - both from investors and internally - to spend, quoting economist John Maynard Keynes, who noted that "the market can remain irrational longer than you can remain insolvent".
"Transitioning your business costs money, and if you don't have the cash to [make] that transition and you can't make it to the other side, you're gone," Kerley said.
The forum takes place on November 13th, and is sponsored by Enterprise Ireland and Deloitte. The theme for this year's event is Profitable Growth in a Challenging Global Economy.
