Real opportunity for well-capitalised firms to take market share

Sponsored feature | By Matt Smith, partner at Foresight Group

The last few months have probably presented the biggest challenge faced by most SMEs since they were founded.

We have been working hard with the management teams of our 90+ SMEs, making some pretty tough decisions. However, there is a silver lining. This period of uncertainty, which, although likely to continue for several more months, will inevitably present opportunities for resilient, well-managed and capitalised companies.

Alongside their considerable, tactical day-to-day efforts, our portfolio companies are now turning their minds to the future, and to a different economic environment. There are many predictions as to how fast the economy will recover and what the new normal will look like. We see little merit in crystal ball gazing. Frankly attempting to predict anything with any degree of certainty in this environment is nigh impossible. That said, we are cautioning businesses to pursue a careful and staged return over the coming months, where they continue to put employee and customer safety first whilst retaining their market position.

It’s tempting to assume normality will return relatively quickly. Across our portfolio we are attempting to improve our ability to match spend with demand more closely and in real time. While a company might miss out on short-term profit if demand returns quicker than expected, the resilience it provides is invaluable in an uncertain environment.

From a cash perspective, companies must ensure not only that they have sufficient funding to retain staff and customers, but also that they are able to fund their working capital cycle as revenues return. A close eye on debt and creditor backlog is important.

The real opportunity for those resilient and well-capitalised companies is to grow their market share. There seems little doubt that some competitors will fall by the wayside. Those who have acted quickly to solidify their position, strengthen their balance sheet and understand their customers’ needs inherently, will be able to react effectively to events as they unfold. Although this particular economic cycle may be different, we understand that supporting entrepreneurs at such times is both important and rewarding.

Foresight, which has recently opened an office in Cambridge, is a leading independent infrastructure and private equity investment manager with approximately £5 billion of assets under management. The private equity investment team are among the most active investors in SMEs in the UK. The team invests across the life-cycle, from early stage through to established business. Foresight recently launched the £100m Foresight East of England Fund, targeting equity investments of between £1million and £5million in SMEs in the East of England and beyond.

For more information, visit foresightgroup.eu.