We are half way through the global financial crisis and Australians, far from panicking, are taking a sensible approach. COLIN BENJAMIN
By Colin Benjamin
Despite all appearances to the contrary, talk of “r” and “d” words, political point scoring in the Parliament and more global terrorism atrocities, the business world is not falling apart.
Consumers are taking all this to heart and making a flight to quality and a reassessment of the differences between necessities and niceties. They expect a steady decline in interest rates will see them through until the end of the financial year provided that they cut back on non-essentials.
While there is an increasing respect for longer term options and ethical investments, and considerable difficulty getting venture capital for fancy start-ups, there are still good opportunities for smaller investors who are supporting family business expansion based on proven products and strong customer relationships.
Firms that have done their homework, identified franchise or longer term contract options, are finding that there are networks of friends and advisers who have access to cash that has been held out of the market in the hope that the bottom is in sight.
Companies are making adjustments rather than taking drastic action, engaging casual staff to meet work requirements and narrowing their inventories to match short and longer term forward orders.
Business leaders are taking the opportunity to revise down over-optimistic trend lines from the good years to ensure that resources are applied to market consolidation. The only group that are really feeling the global credit crisis are those that rely on OPM (other people’s money) and fat margins through market manipulations, short selling and leverage of other people’s intellectual properties.
Business owners who have managed liquidity and focused their marketing efforts on viable and sustainable commercial relationships are finding that they need to make three contingent plans:
- Terms of trade and credit management based on a move from short term selling and discounting (in the hope that volume will make up for loss of high margins) to marketing (building smaller market entry positions through more effective targeting).
- Innovation, creativity and entrepreneurism (“ICE-ing” the moment) to find novel ways to disaggregate value chains by offering superior systems and services that add value to the productivity of key clients that help them make or save money.
- Concentrating on business system reviews, database management and high quality customer relationships and retention strategies that generate long-term growth and development of strategic alliances for shared marketing and promotion efforts rather than attempting to sail through the next few months alone.
Governments around the world have got the message that we are halfway through the global financial crisis, and that they must find ways to massage the monetary and fiscal policies if they wish to remain in office in a couple of years.
What they now need to see is that regulations and rules that limit smart company growth need to be reviewed to encourage a re-emergence of vibrant local business.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.
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