In the current economic environment, most businesses are struggling to make strategic decisions: Acquire and invest in projects now or hunker down and wait for the promised recovery?
Options for growth abound: less competition from Wall Street buyers, more companies willing to sell and cheap talent to ensure post-acquisition success. As usual, the main question is timing: Should a company wait or invest in growth now? Did the market hit bottom? Watching the volatile market is frustrating, but waiting too long could be fatal for businesses. The situation is similar to timing a bubble burst. In hindsight, most investors wish they never waited for the Internet bubble or the real estate bubble to peak before cashing in. So how is the current situation any different? No one can time the bottom, but everybody agrees that there is more chance the market will get better in the next 12 to 36 months.
Companies need to make an educated decision based on facts and analytics instead of following the herd and play the wait-and-see game. One way to look at it would be to evaluate scenarios of a dollar invested today and the possible outcomes 3 years from now (these scenarios are for illustrative purposes only and could change depending on the industry and on the business model):
- Market dips by another 25% (the real bottom) but then recovers 3 years later
- Market remains volatile but stays at 0% growth (stuck at the bottom)
- Market increases at a steady 5% rate indicating that we already hit the bottom
In all these scenarios, investing now in new projects makes sense. Your business could be recklessly cautious and miss on great opportunities to invest and acquire. Anybody looking for short-term gains is bound to lose big sooner or later, but a long-term decision based on facts has a high likelihood of paying big.
Options for growth abound: less competition from Wall Street buyers, more companies willing to sell and cheap talent to ensure post-acquisition success. As usual, the main question is timing: Should a company wait or invest in growth now? Did the market hit bottom? Watching the volatile market is frustrating, but waiting too long could be fatal for businesses. The situation is similar to timing a bubble burst. In hindsight, most investors wish they never waited for the Internet bubble or the real estate bubble to peak before cashing in. So how is the current situation any different? No one can time the bottom, but everybody agrees that there is more chance the market will get better in the next 12 to 36 months.
Companies need to make an educated decision based on facts and analytics instead of following the herd and play the wait-and-see game. One way to look at it would be to evaluate scenarios of a dollar invested today and the possible outcomes 3 years from now (these scenarios are for illustrative purposes only and could change depending on the industry and on the business model):
- Market dips by another 25% (the real bottom) but then recovers 3 years later
- Market remains volatile but stays at 0% growth (stuck at the bottom)
- Market increases at a steady 5% rate indicating that we already hit the bottom
In all these scenarios, investing now in new projects makes sense. Your business could be recklessly cautious and miss on great opportunities to invest and acquire. Anybody looking for short-term gains is bound to lose big sooner or later, but a long-term decision based on facts has a high likelihood of paying big.
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