Start looking now for signs of growth

As I write this, “Business spend in fastest fall since 1966” is the headline
in the FT. I’m presuming that was the case then because everyone was suffering
from a football hangover along the lines of “Who cares about business? We won
the Cup”.

It’s hardly a shock. The market has been a bloodbath for the last two years.
Spend is down, profit is down, everything is down; so it’s no great surprise
that investment has to follow. FDs are increasingly frustrated their role today
is purely about taking cost out rather than investing for growth. And that’s
hardly surprising. Money will only go so far, and when you’ve got to try to make
it go further, that’s neither easy nor fun.

Now, this creates a self-fulfilling problem. If you manage your costs
aggressively and don’t invest in the future, sooner or later you damage the
chances of having any sort of future at all. And this has greater implications
for FDs because there will come a time when you need to focus on investment

If all you have been doing is worrying about cost, you are going to look less
relevant than someone who has been managing growth.

This begs an obvious question: if no one is investing, how do I get
experience of managing growth again? Well, that’s where the FT headline is a bit

Of course some businesses are investing. This has been a strange recession.
It has hit some sectors hard and early, others hard and late, and others still,
softer but more constantly. Some businesses cut deep and early ­ and some
(whisper it quietly) are seeing some signs of growth. And some are starting
(whisper it even more quietly) to invest again.

And then, of course, you have got the companies that have not been hit at
all. I’m not suggesting there are hundreds of these but there are some and they
are recruiting. These jobs are competitive because people want to be in growth
environments more and more ­ but they are there and people are moving in to

But there are some companies which are just starting to come into the
downturn ­ and these will still be recruiting as well. For others, the trend
downwards may not have happened yet. So beware. You could jump from one business
as it’s about to turn back up, or to another as it’s just about to start turning
down. And either of these, by anyone’s reckoning, would be unfortunate.

Mark Freebairn is a partner at Odgers Berndtson

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