We all breathed out a sigh of relief when borders started to open, believing that we could finally put the pandemic behind us. But with the War in Ukraine, labour shortages, and lingering effects of Covid-19 on our economy, normality seems further away from reach.
With the CPI rising by 6.1%, the fastest annual increase in 21 years, and the Reserve Bank raising the cash rate by 50 basis points, its fastest tightening action in almost 30 years, most people are concerned for our future.
Tailored Accounts, as a firm, is not unfamiliar with obstacles and roadblocks. We started in the middle of the GFC, but have since grown into a thriving firm specialising in business financial management, CFO advisory, Tax and business efficiency & automation. Over the past 14 years, we’ve also had the pleasure of working with a wide range of businesses in different industries.
My years of experience helping businesses deal with the most challenging or exciting periods of their business have given me a unique insight into how businesses could navigate through these difficult times. I strongly believe that sharing our knowledge and opinions, helping each other, is the key to surviving these upcoming challenges. I want to see all of you on the other side of this crisis!
I don’t want to put more negative thoughts in your mind, I am confident that we will get over this crisis and become stronger and more successful than before. But hiding away from reality and pretending that nothing is wrong will not do you any favours. Tough times favour sturdy business. When economies are running hot, they can accommodate weak businesses. In this survival of the fittest scenario, only well-managed businesses, offering good-value products and services will continue to attract customers.
So here’s the big question: How can businesses be more resilient & durable in a crisis?
1. Stop the bleeding of cash flow, cash is KING.
Everyone knows that you can’t do anything without cash! Understand where your cash is coming from, identify the areas where your cash flow is bleeding, and close off those tabs as soon as possible.
Now is the time to be hyper-aware of costs and understand what is driving them up as well as how you can do things differently. Avoid doing nothing, every little bit you do is one step in the right direction. Focus obsessively on finance. When conditions are challenging, every dollar coming in and out of your business counts!
Keep in mind that it’s always the calmest in the eye of the storm. Sometimes, an external perspective can do wonders for identifying areas of concern. Make sure you sit down with your accountant & CFO to do a full review of your financial health. Stop all cash flow bleeding spots as soon as possible!
2. Stay Calm, Seek Knowledge, Share Advice
There is one thing you can’t have a shortcut with and that’s experience. With high inflation being out of the picture for many years, it is likely that many of your employees, executives, and maybe even board members will have no actual experience in dealing with it.
But inflation is not something unheard of. It’s not a big, scary, world-altering pandemic. Find that person in your circle who has this experience and look for their advice. Seek knowledge, educate yourself, and when you know something worthwhile, share the advice.
We don’t live in an isolated bubble. The retail store that earns 20% less will have employees earning 20% less on commissions. These employees will have 20% less to spend on other businesses. We all do better when we help each other succeed.
3. Look After Yourself
This means both physical and mental health. When the lockdown started on 19 March 2020, I couldn’t sleep. My mind was fixated on the restaurants and cafes that would be the first in line to suffer. Nothing that came out of that night was positive but a long walk helped me reset my mind and focus on what needed to be done.
Stress and exhaustion are some of the most unspoken issues in the business world. It is easier to hide than to admit to someone that you need help. In difficult times, you need to have the confidence to admit when you are under immense stress. If you can’t figure it out on your own or do something to bring yourself out of the negative headspace, please seek help.
Being resilient and durable is not the same heroic image Hollywood has painted in our minds. Being resilient and durable is about having good people with you in the most difficult times and knowing when it’s time to ask for help. They are your family, your friends, your colleagues, and your trusted advisers. We are all the winners when we come out on the other end of the tunnel!
Economies, especially those of Australia and New Zealand, have long behaved in unexpected ways. So, business owners would be wise to take both economic forecasts and advice from so-called business gurus with a grain of salt. Maybe all of this is just worry warts blowing things out of proportion but, there is a 50-50 probability and the stats are right there in front of you. Better to be safe than sorry.
Survive now, thrive later. Many of the world’s greatest companies were started in the middle of an economic downturn. Any business that survives long enough will undoubtedly encounter unfavourable conditions at some point. A business that can survive the hard times is well placed to thrive during the good ones.
See you on the other side!
Source: Harry Hoang | CEO of Tailored Accounts
Covid-related disruptions, the war in Ukraine, labour shortages, and a myriad of other issues have placed the global economy in a precarious position. With the Reserve Bank governor, predicting that inflation will reach 7% by the end of the year, it’s time to understand the ins and outs of inflation so you can start preparing your business.
With inflation at a level that hasn’t been seen since before the Global Financial Crisis following on the heels of a global pandemic, we’re living in unique times. But while we may have limited control over prices, there are still some things we can do to minimise current and upcoming financial pressures.
