Stay ready to pounce, bank urges businesses

Mid-sized businesses are hunkering down and focusing on survival in a rational response to the current recession, but ANZ Bank says they should also be staying alert and keeping their claws sharp, ready to pounce on weakened rivals or other opportunities.

The bank's third annual Privately Owned Business Barometer released yesterday found that while most businesses were making long-term strategic plans, most of this was defensive, focusing largely on cost-cutting and other financial measures.

"It's comforting to know, in general, businesses are facing the reality of the economic situation and doing what is probably the right thing," said ANZ managing director of commercial banking Graham Turley.

"We'd like to think they're also doing that with an eye on the future.

"While the current conditions are challenging, they may open up opportunities in the long term if owners widen their perspective and consider what is happening with their suppliers and competitors and the opportunities from consolidation that may occur.

"We will see mergers and consolidation ... we will see some people with business products and the way they do business become outdated.

"We always see through different structural changes and major economic downturns, marketplace changes create opportunities that once weren't there. Structural changes mean you have to adapt and people that understand those changes will actually be able to grow market share, others will fall behind. Fortune favours those that are well prepared."

The survey focuses on privately owned businesses with annual turnover of between $5 million and $150 million.

It discovered that while businesses were - despite the recession - continuing to plan for growth, there was uncertainty about how that would be funded, mixed views over the availability of capital and an increased aversion to debt.

The recession has also altered what businesses perceive to be their biggest challenges. Last year the top concern was the availability of skilled labour.

Twelve months later, flagging customer demand was the most pressing challenge - identified by 27 per cent of respondents. Exchange rate movement cited by 18 per cent and domestic competition/market pressure cited by 15 per cent were also seen as bigger problems than the availability of skilled labour.

ANZ said planning for a change of ownership, which had been a key issue for businesses in the two previous surveys, had been relegated to the back burner by many as a result of the current economic crisis.