Tips for businesses facing challenges in uncertain times.

These are uncertain times, exacerbated by the one-two punch of COVID with the threats and realities of war.  The current challenges that businesses in New Zealand are facing include supply chain issues, high inflation and problems with procuring suitable staff. With the risk of rising interest rates and tighter monetary conditions, businesses must find ways to cut costs to make up for weaker sales growth. To offset higher costs, businesses also need to balance raising their own prices with maintaining competitiveness in the market.

In uncertain times it is prudent to:

Retire debt.

Retiring or reducing debt as much as possible will help to minimise the impact of high inflation.  Prioritising the reduction of floating/high interest debt will assist in keeping costs down.

Collect payables.

Be vigilant with debtor control.  Receivables should be monitored closely and non-payment followed up quickly.

Manage cash flow.

Ensure your financial data and invoicing are kept up to date.   Creating and monitoring accurate forecasts will highlight any issues before they arise.  Choose to be proactive rather than fight fires, such as sourcing a line of credit before the need occurs.

Continually review profitability.

Identify any impact that supply chain issues and rising costs may be having on your bottom line, any opportunities for growth, and areas where spending or waste can be cut back.

Cut losses that may cause more losses downstream.

Some flexibility around losses may be acceptable in a more stable environment, however when uncertainty abounds, it is wise to weed out the losses which are no longer sustainable.    

Be brave and possibly daring when you can afford to.

As Albert Einstein said, “in the midst of every crisis, lies great opportunity”.  Calculated risk-taking inspires creative thinking.  If you have identified an opportunity, have done your due diligence and have the means to support a new initiative, be brave.