Now is the time to ensure you have strategic preparation plans to safely and progressively get you through the other-side of this predicted recession that will surely test us all.
Business should now look at preparations and include a need to challenge the once conventional wisdom that has successfully brought us through these gigantic challenges on previous occasions.
We must all now look to review how our business is structured and in particular look at the ‘Vital Signs’ of what makes the business tick including what adds value to each and every move/decision you take.
This is a time when you must re-assess and incorporate ‘Change-Management’ including areas of debt, decision making, workforce management and technology. Digital transformation will be a key driver in taking a business forward.
Let us seriously look at releasing ourselves from the dependency of overseas supply and being eventually held to ransom by those who have no loyalty whatsoever in Australia.
In a paper I presented a few years ago at parliament house in Canberra on behalf of Austrade, I made it undeniably clear that as a country we were not that far behind China in a price competitive sense when you add all of the additional costs to the quoted prices. There was only about 10% variance. I also made the point that it would not be long before China was hard pressed to provide internal supply needs along with their commitment to the USA before they saw Australia’s volumes as nuisance value and started to raise prices or tell us to resource.
Today we must look at the level of debt we have to successfully run our businesses and it is important to set your debt to asset ratio at best practice levels which will allow you manage through the challenge.
It is sad that the banks today have little interest in assisting business in line with the governments unsecured loan arrangement simply because they are being managed by academic staff who have little or no knowledge of business principles or know-how. It’s about time that banks be shown up for what they truly are. Useless in business. They use excuses like you have no been affected by the coronavirus? They treat the business community like idiots but project themselves as the true idiots.
You may ask about an investment in technology during a potential recession. Money is tight, however during these times the opportunity costs are lower. Funding IT initiatives can only enhance revenue and income. It can also help in cutting costs and making the business more agile which will provide an additional capability to handle the rapid change needed to survive the extent of a recessionary trend.
When I look at the key ‘take-outs’ from past recessions, which I have experienced, the great depression saw GDP contract 9.4% over 4 years and unemployment rise to 20%. During these times of challenge there were periods of excess investment and consumer spending which both had to be unwound and unwound effectively and speedily.
The bottom line is that while we may see the biggest hit to our Australian GDP since the early 30’s thanks predominantly to the shutdowns, there are distinct differences.
- Growth could rebound quickly once the virus is under control and our policy stimulus impacts
- The key to this will be in the new number of coronavirus cases slowing and that collateral damage from the shutdowns are minimized.
Yes we can come through this challenge together and without re-inventing the wheel. It will be a tough slog but as we all know the interest rates for government and private borrowings have never been lower and should position our economic debt recovery to be much easier to manage.
The fact that government is forecasting that over the coming months we will get around 650, 000 back into work is great news, but there must be public support for those managing our economy without some of the inane criticisms that are made in the name of politics.
I give great credit to the formation of the National Advisory Committee which has shown bi-partisan politics for the first time ever. Lets all ensure we keep this going.
Let us not encourage making this health and economic challenge a political and media sensationalizing exercise but instead work collaboratively work together and we will once again succeed and demonstrate to the wider world that we can make Australia great again and ‘Take Australian Business to the World’