Business challenges are what make or break a good leader. Approaching a problem with a clear logical plan should result in success while burying your head in the sand will almost certainly lead to failure. A business that has never faced any challenges is probably not performing very well.
COVID-19 has amplified the challenges for many businesses – not just due to the logistical issues associated with a lockdown, but also due to the uncertainty. A continually changing regulatory framework, combined with resourcing, and supply chain issues gives even the most hardened leader a headache.
As well as the short-term challenges associated with the lockdown the way we do is business has changed forever. Zoom is king, while the global travel industry collapsed almost over-night. Changes in the ways we work and trade with the world will continue to happen for the foreseeable future.
Failing to change to this new world is likely to severely impact the sustainability of your business. While others thrive and benefit from the opportunities this new world presents, your competitiveness will be significantly restricted without change.
There is no doubt, stress and anxiety are sure to ensue as your business adapts. If you do not adjust and adapt, there is a significant risk that you will start to be hit in the pocket. Stresses on your family life, personal finances, and health will only amplify the problems.
To avoid such problems, you should develop solutions early. For example:
- Spot the signs of problems early and closely monitor the risks and impacts.
- Transition and Restructure – nobody likes to do this, but sometimes you must think of the greater good. A small downsizing that saves the company is always preferable to blindly sailing on in a sinking ship.
- Before it all becomes too much, seek advice. There is no pride lost in asking for help at the right moment to avoid more serious problems down the line.
1. Spot the signs:
Spotting the signs early may sound complicated, but when broken down into simple steps, it can be very easy:
- Downward Trends
Almost all businesses have some core metrics that will indicate success or failure. Financial reports and dashboards are some of the most common methods. Using these charts, you can easily spot if your trailing twelve-month margins, ratios, or a 13-week cash flow forecast are starting to waver. If you spot the trend beginning to change direction, make changes early. Crossing your fingers and hoping for a swing is most unlikely to achieve results. - Working Capital
The current low-interest rates and excess liquidity are making banks and investors more willing to lend to a business that will provide a return on their investment. While taking on debt in a business may sound scary and can lead to serious problems, but if you borrow responsibly and carefully, manage the debt, and repay at the correct time, then it can be an incredibly useful tool. Just make sure you do not borrow more than your balance sheet can handle. - Market Trends & Pipeline
Pipelines are incredibly important to all businesses. You can be happily working away delivering orders until one day they simply stop. A strong pipeline is essential for any business to succeed. If you look ahead and cannot see where future orders will come from, then it is time to make some urgent changes to the way you run your business. - Regulatory Environment
Constant monitoring of the regulatory environment and upcoming changes in the law will ensure you are ready to confront any challenge. During the COVID-19 pandemic, many governments found ways to “fast-track” new laws and regulations. While these changes have immediate positive effects in many cases, they can often lead to unexpected consequences. Keep your ear to the ground and make sure you are ready to react quickly to whatever is thrown your way.
2. Transition & Restructure
Once you have identified the signs of trouble ahead it is time to do something about it. Developing a clear, coherent plan, then executing it to the letter is the only way to ride the storm. Existing processes and procedures may need to be quickly modified and adjusted to the rapidly changing landscape. Restructures are always stressful and painful even at the best of times. Try to remove emotion from the decision making and make the best choices for your business.
3. Seek Help Early
Failing to ask for help early is one of the biggest mistakes any business can make. The world of business is full of experts and experience. If you are struggling, there is no shame in asking for help. Simply find an expert in the field you are struggling with and ask for help.
The current challenging times is not the best for experimenting and learning by trial and error. A consultation with an expert could make the difference between long term success or failure.
Final Thoughts
Getting ahead of the curve and staying on top of your business is always important. In the current uncertain climate, it is even more important than ever. Spotting trends early, putting a plan in place and making changes to your business structure are all ways of ensuring long term success.
Consulting with the experts will help you cement your plans and lead to success.
About the authors:
Shivendra helps construction companies and contractors win more projects and grow profitably. Regarded as a master of practical implementation, Shivendra has guided organizations such as Downer and Siemens as well as smaller contractors to achieve double-digit improvements to their bottom line.
Underpinning his extensive industry experience are qualifications in engineering and a PhD focused on rapid cost improvement techniques. He is the author of two books, The Competitive Contractor and From Paper to Profit, host of the Competitive Contractor podcast, and the founder of Shivendra & Co and The Constructors Network. You can find more about Shivendra & Co on www.shivendra.com.
Brendan is an experienced and commercially astute CFO with a strong corporate focus in medium and large Australian and overseas organisations. His gained experience working with organisations experiencing significant change (including listing and corporate due diligence frameworks required on the ASX), growth and challenging market conditions, and held senior Finance Executive positions including Company Secretary and executive board positions understands the challenges and gaps that occur concerning strategy setting, regulatory governance, and risk with key stakeholder engagement. Industries Brendan has been exposed to include Infrastructure, Resources and Mining, Transport Services and Power Generation and distribution. Brendan is a CPA qualified Accountant, MBA (Executive) from RMIT University (Melbourne, Victoria), Taxation Institute of Australia (Fellow Status) and is a Justice of the Peace (QLD). You can find more about Brendan on https://www.linkedin.com/in/rafterybrendan/.