Simply trying to “just survive” during the economic downturn is not going to cut it during 2012, and a leading business turnaround consultant has warned businesses must take the uncertain conditions as an opportunity to stand out from the competition.
However, according to Fingland, the worst thing Australian businesses can do during the “new GFC” conditions is to approach this period with a “bunker down” attitude.
He pointed to signs of economic slowdown in China, the predictions of poor retail results over Christmas and concerns about the carbon tax impact, as signs 2012 will be very challenging for many businesses – and Fingland believes tougher than the original GFC aftermath.
“You need to treat tough times as an opportunity, and be doing something different to stand out from the competition so you can continue to grow and source capital to fund the business,” Fingland said.
Additionally, he advised that those companies more likely to effectively weather the economic downturn would be the businesses that don’t panic and automatically resort to laying off staff to cut costs.
“Those more likely to come through the tough conditions in better shape will be the ones tightly managing their working capital, continuing with research/development and innovation, showcasing their ‘demonstrable’ unique selling proposition and standing out from the crowd,” Fingland said.
In 2012 the Australian Securities and Investments Commission predict some 16,000 Australian companies will become insolvent, but that a significant number could be saved with better business modelling.
The economic downturn has meant business conditions can change rapidly, and many business leaders have been forced to rely more than ever on risk management strategies to protect their businesses.
According to Fingland, business leaders need analyse their best and worst case revenue, margin and working capital scenarios. This sort of stress testing, he said, can help businesses decide on a range of initiatives to deploy in case market conditions deteriorate any further.
“Regardless of the position your business is in, it’s essential to be undertaking detailed financial modelling and ‘what if’ scenario testing to gauge how various sudden changes in market conditions will affect your business and more importantly, what initiatives management can deploy to combat these challenges,” Fingland added.