Finding opportunities after the public spending review

Those willing to change the way they operate can actually gain from the public sector spending cuts, Leslie Kossoff explains.

Image: istock
Image: istock

If you have never been a fan of change, now is the time to change your attitude. Why? Because as a result of the chancellor's spending review, for all the services that are going to be cut and the costs that are going to be reduced, there will also be a lot of money out there for organisations that want to change their business model to fill the holes that the budget reductions are creating.

It is all about opportunity and the willingness to change your company to take advantage of what those opportunities are presenting.

Starting next March, I will focus on the steps needed to build a variety of options for your business in this economic climate. To begin that process, you need to have the foundations in place. That way, as you build, you are building - from the get-go - for success in a changed and changing world.

The long view

To begin with, it is all about your attitude. Having a long-term view will make all the difference in both how you make your decisions and what decisions and changes you choose to make. Public sector jobs are going to be lost, but that does not mean that their work will not be needed any longer. It will simply be done by others.

There is no reason why your organisation cannot be the one to benefit. Almost every part of the sector - with the possible exception of garden retail centres (although even they could get in on the act) - can find a way to profit from filling the holes left by such redundancies and closures.

In many ways, the Government is making it easy for you to take advantage of the problems the spending review has created. Cabinet minister Francis Maude, for example, has announced a £10m fund to help those who lose their jobs to create businesses and offer their services back to the local governments. In finance sector parlance, this is the same service, but just a different budget bucket.

Add to that the focus on social enterprise, decentralisation and local government empowerment and you have the beginnings of a lot of opportunities that will grow over time. Part of that long view is the ability to realise that once something has become privatised, the chances of it being made permanently part of the public sector again are pretty small.

So, if you are not one of those on the way to losing your job, but you have a business or business idea that will fill one of those local government holes, it is time to do a deal with one of the soon-to-be redundant public sector workers. They will have the insider knowledge about what is needed and you will have external knowledge of how to pitch and price it.

The same advice applies to public sector workers who either know or think their jobs may be cut. Start thinking about the suppliers who contracted with your area and decide who you would like to do business with because together you have access to those millions. And the piece of that fund's pie that you manage to acquire will give you the financial support to grow.

The social enterprise question

One of the biggest questions here is: Can your business be a social enterprise? Chances are that it can - and it may be something that you should consider.

There is a lot of misunderstanding about what social enterprises or not-for-profit organisations actually are. The most common of them is that they do not make a lot of money and that the people who work for them do not get paid very much.

Both of those are wrong - or at least they are if you run your business successfully. Some of the largest, most innovative international healthcare providers are not-for-profit organisations. Groups such as Kaiser Permanente, the Cleveland Clinic and the Mayo Clinic all fall into the social enterprise sphere - and they make lots of money. They pay well, too.

Credit unions - the US equivalent of building societies - are also not-for-profit organisations. And while there are a number of small players in that field, many of them have assets of more than $1bn. So when you think "social enterprise", do not immediately think small. Just think structure.

It is simply a matter of making the commitment that "profits" are re-invested back into the business. That turns profits into revenue or income, but not "profits" per se. However, depending on how well you build the business, there is no reason why you and your partners cannot scale up, expand and both earn and pay good, solid salaries and bonuses. You will be benefiting society, too.

Joint ventures

Which brings us to joint ventures and the further opportunities the Government has provided. Even before the coalition came into power, the Labour party had already shifted as many functions as possible to charities and the third sector. Now, from the NHS through to local authorities, this has become standard operating procedure. It also represents an excellent opportunity for you to enter the markets you might otherwise have had difficulty accessing.

This and the social enterprise option is an especially good strategy for edibles growers and any sales consortia with which you work. The more that you can partner with charities to help them expand their offering - especially because they will have access to services that would not otherwise be open to you - the more attractive they will be. That opens the door to new markets and new customers on a large scale.

I may be speaking out of school here, but having worked with the NHS and seeing the changes that started being put into place with the advent of foundation trusts and the independent trust regulator, Monitor, it strikes me that there is a world of opportunity in the health sector for you. Particularly if you take a brutally realistic (read "cynical") view of the current state of affairs.

Currently, the NHS money is ring-fenced, but it is still facing big, devastating cuts. What you bring - particularly to NHS hospitals and care centres that may be part of the NHS or simply affiliated and paid for by the health service - is a means of cutting costs and improving both products and services. This is where garden centres come in, so pay attention.

With the move to GP commissioning, one of the longer-term outcomes will be hospital closures. That is because with a managed care system, which is the private sector equivalent the NHS is now beginning to emulate, the goal is for hospital beds to be empty. More patient care moves to outpatient providers (NHS and otherwise) and long-term care centres grow quickly as a secondary market.

What that means in your sector is that the foundation trust hospitals and care centres desperately need to find ways to provide better, more attractive, more patient-appreciated, low-cost services. Either working on your own (in which case, make sure that you meet with the hospital chief executive and not a purchasing agent) or in concert with a charity (which will open many doors), present what you have to offer in terms that they want and need. Better, fresher, lower-cost food delivered on a daily basis, landscape care and maintenance, interior plant decor and upkeep.

Foundation trust hospitals are competing with each other in a system that is designed to shrink. That means opportunity for you, because you will find ways to cut their costs while increasing your revenues. It is a big win and is now available in every county across the country.

Two key questions

This leads us to two key questions that - no matter in what part of the sector your organisation resides - you need to ask if you are going to nail your new opportunities:

- What are your competitors not doing?

- What do your customers want?

We will take them one at a time. Firstly, what are your competitors not doing? There is, in every industry, a tendency to be a me-too. To follow the leader. To do what is safe and known and accepted.

You cannot do that any more. The market demands that you do more, better and different. Because if you play it safe, you are going to be swept aside by some other business that is bigger, better funded or simply willing to go to the places that you were not willing to go.

So take a moment to think and ask yourself:

- What is it that, when I look at the competition, I realise the others on my playing field are not doing?

- What are the products, services and ways of doing business that will differentiate us?

- What are other businesses, in my sector and beyond, doing to set themselves apart?

- How might some of that type of thinking be applied to what we do?

- Are we playing it safe? Too safe?

- How much risk am I willing to take?

- How can I structure deals that allow me to take risks but within a structure and strategy that mitigates them at the same time?

- Who else should be on my team as I look at providing what my competitors are not?

- How can I build value in my perceived offering by partnering with others?

All of which will lead you to the second key question - what do your customers want?

For the most part, your customers have everything they need. In some cases, more than what they need. This means that, rather than looking at what you do through the prism of their needs, look at what they actually want. That will open a lot more doors both in the products and services you provide and in how you provide them.

Take yet another moment to ask yourself:

- What is keeping my current customers up at night?

- What frustrates them?

- What enthuses them?

- How would they define their best possible experience with someone who provides what we provide?

- What, in comparison, are they currently receiving?

- How can we fill that gap and provide them with the products, services and customer experience that they crave?

By putting the answers to both those sets of questions together, you will find that your strategy and tactics, with your customers and within your own organisation, begin to naturally change. And if you keep asking those questions over time, you will stay ahead of the curve and keep those customers. If you do that, you will be able to scale and grow and succeed beyond anything you previously thought possible.

Get vocal and involved

It is not enough just to look internally. The changes that are going on in the current climate necessitate a different type of participation in business than you might have previously pursued.

Look at the local enterprise partnerships to see what opportunities they are presenting. And, if they are not offering anything of interest, start talking about how they can improve. They are in the developmental stage so this is the time to be vocal.

Also, get vocal about the creation of a general application for service provision to local governments. If this existed, it should allow you to gain approval across the board, once you are approved by one application. Fight the red tape and talk loudly about how the Government can - and should - go even further to help you build your entrepreneurial venture.

Because that is what you are. An entrepreneur. Someone who is building something more and something, whether from start-up or an existing platform, that did not exist before.

You are taking the risks - and they are big ones. But they are not without permission. Permission from a Government that says it is committed to your success. An entrepreneurs' forum has even been created just for that purpose - to enable ministers to engage with business people and their enterprise. To drive growth and create jobs.

So it is up to you to make sure that they know what you want. You need to let them know how to help you succeed. Which you will. Because the good news is, change is always on your terms. Big or small. Fast or slow. You are the one who decides it, implements it and, if it is working, keeps it. Or changes it again. So, what is it you want? Now, go do it.

Leslie L. Kossoff is the author of the Leadership Quantified papers. See

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