Posted on 01/10/2014 · Posted in Lamberhurst, Leadership, M&A, Strategy

I’m delighted to be able to introduce David Croydon of Hilltop Consultancy as a guest contributor to my blog.  David is a fellow member of The Lamberhurst Corporation Consultancy Network, who specialises in helping businesses with growth strategies, mergers and acquisitions.  If you are interested in what David has to say and would like an introduction please make contact.

BOOM OR BUST?

I was at the excellent Shirlaws business conference this week, full of business owners taking time out to work on their business rather than in it.

The last session of the day was a talk from founder, Darren Shirlaw, on the prevailing economic conditions and his predictions for the future.

Normally I’m a bit (alright a lot) cynical about economic predictions. You know the old joke: how do you get three different ones? Just ask two economists.

But this particular presentation was compelling because it was based on factual trends going back several centuries.

There is a school of thought which says that, to be super successful, you have to take a good look at what the competition in your market is doing and then do the exact opposite.

This contrarian view is, of course, an excellent way to stand out from the crowd and promote a tangible point of difference, providing it is based on sound business principles in the first place.

When it comes to investing hard-earned cash in future growth, however, there is bound to be a mix of scepticism and uncertainty, based on fear of getting it wrong.

So how about this for a prediction? Following the worst double-dip recession in memory (including the Wall Street crash), we are now in the  early stages of an 18-year run of growth. Based on what, I hear you say? And that’s where the presentation got really interesting.

TIME TO INVEST

All the market patterns for the last century (three centuries actually, though we didn’t go back that far) show astonishingly similar repeats of bull and bear markets: 18 years of growth followed by 12 years of flat-lining. These flat-lining years include recessionary periods.

If you look at where we are right now, it is about the same place as we were around the turn of the millennium. In other words, notwithstanding what is likely to be called the second great depression by historians, we have a flat growth line over around 12 years.

Go back before that, and stock market data shows with absolute clarity the repeated patterns of bearish flat-lining and bullish growth, endlessly repeated. There is plenty of material out there to back up the generality of this theory, if not the numerical specifics. Have a look at this: http://www.marketfolly.com/2010/10/long-term-stock-market-cycle-where-are.html

So regardless of the Jeremiahs predicting a continuing era of sluggish growth, the Shirlaws prediction is, we’re heading for the boom years. Not uninterrupted growth. But still a significant over-arching 18-year pattern. With a single market correction about a third of the way through.

What does this mean to business owners? Quite simply this: if he is right, the time to invest in growth is NOW (and not in three or four years’ time, once patterns are established – just in time for the next correction). To see the logic behind the prediction, take a look at the Economic Clock, which describes the cyclical nature of events in graphic simplicity. http://www.shirlawscoaching.co.uk/economic-clock/  The current time on the clock, we were assured, is 8.45.

Don’t believe any of it? Your call obviously. But since we are patently coming out of recession, regardless of what the politicians say or do, there is probably no better time to be investing in your business than right this minute.

If you are sitting on cash that you’ve been accumulating and saving against more rainy days, now is the time to start investing a proportion of it in growth strategies.