Who’s winning in this economy?
With the new financial year upon us, we are now looking back at the year’s end results and seeing how we tracked in business compared with past years.
Despite assurances from the Federal Government that all is well with the economy, in fact all but the mining states are doing it very tough indeed.
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In this economy, again if we remove the mining states, the businesses that are prospering are the lawyers overwhelmed with litigation; receivers and administrators trying to make sense out of failing businesses; accountants trying to make two minus three equal plus one; and the childcare sector as more mums move into the workforce in an attempt to make ends meet.
The age care sector is also doing well as more people move to retirement or nursing homes, but then again, many people are deferring the retirement decision courtesy of the world economy, economic uncertainty and general fear of the future.
In fact, if your business is down in real dollar terms, compared with the past, you are not alone.
Many business operators are 40% or more down and they see no immediate light at the end of the tunnel.
Some that may have had done well in the past are now wondering whether to close up shop and call it a day, especially if they have a secure nest egg put away after years of hard work. Why now throw good money after bad in such an uncertain environment? The answer is: many simply don’t.
Three vital questions need to be addressed:
- How are you tracking compared with last year?
- Are you going to weather the storm or simply “shut up shop”?
- If you are in for the long haul, what are you going to do differently in the coming year?
The business cycle
If we look at any business that is at some stage extremely profitable, unless there is protection of sorts or huge barriers to entry, others will enter the market in competition. You can be sure over time as more competitors enter a lucrative market that profits will soon be eroded to make the business just an “also-ran”.
Petrol stations, convenience stores and coffee shops may fall into this category.
Indeed as profitability falls with market saturation, one thing is sure: when the tough times come, only the fittest survive. Further, when the good times inevitably return, the landscape is far more hospitable as the weak have disappeared and are no longer competitors. In this regard there is definitely “light at the end of the tunnel”.
Going the distance
If you have made the decision to stay the course and be around for the good times, then two aforementioned questions need to be addressed.
Question 1: Compare your results and assess the weak areas and decide how to address them, if indeed you believe they are worth saving
Question 3: Ask yourself, “What are you going to do differently this year in order to get a better result?”
We all know the old saying: if you keep doing what you have always done you will keep getting the same result. Perhaps it may be time to embrace a new approach and look at the opportunities afforded by systematically innovating your offering and searching for the next opportunity for your business.
Take Microsoft, for example. Ten years ago who would ever have thought Microsoft would be in the hardware business with mobile phones and gaming machines? Who would have thought Nokia, formerly in the lumber business, would have become the number one cellphone maker (until quite recently). Some goes for Apple, branching into phones. These companies have embraced innovation on a grand scale and so far been extremely successful.