Just when we thought Small Business would get a moment to breathe, re-orient and get back on track after two years of pandemic uncertainty, there are a whole new set of problems to worry about.
These are issues I’m talking with our ATB clients about, and also issues I’m seeing amongst the small business industry more generally, in my role President of the Western Sydney Regional Advisory Council and Business NSW.
By Michael Mekhitarian
Welcome to 2022 – the year that isn’t quite what we’d hoped for … (yet).
The most important thing right now, is not to stress – there are things you can do to take control.
The cost of everything is going up. But for business owners in particular, the major increases tend to be the cost of electricity, the cost of insurance and the cost of talented people.
And while massaging the budget might seem like the right thing to do, it’s only going to get you so far. It might also be time to look at restructuring – not just in terms of people, but across the entire business – how can you do things differently? More effectively? Can you collaborate? What can you outsource? What can you scale? Can technology help?
The skyrocketing cost of electricity is driving many businesses to investigate other, potentially cheaper power options, like gas and solar. Certainly the conversion is not straightforward for everyone, but it’s worth researching if electricity is a major cost for your business and there might be a cheaper, practical alternative.
Make sure you do your homework, and get the numbers right.
Insurance is also a massive problem – one that needs some kind of government intervention and solution over the longer term.
In the meantime, it’s unfortunately something that you just need to bite the bullet on – because the only other alternative – not being adequately insured – is just not sensible.
That said, review your policies, shop around and negotiate. Discounts will be available when you have multiple policies with the same insurer.
Now is also a good time to get a really in-depth understanding of your business numbers. We have software in-house that can help you to drill down into costs, and to identify key areas of profit too, giving you a good overview of where you’re at.
What you must do right now, is get a handle on your costs – ignoring them is like ignoring a leaky tap – in the long run it’s only going to get worse and keep you up at night.
If we can help you make a thorough assessment, then by all means make a time to sit down and talk with us.
Right now, do everything you can to hang onto good people.
One way some small businesses are coping with the skills shortage is by offering some of their people extra training and further education. It’s not a silly move, for the right candidates – those who demonstrate initiative, interest and aptitude. It means they will be able to make a broader contribution to the business and, when they change roles, you still keep their expertise in-house. Employees are more likely to stay loyal when they can see a clear career path and feel they are valued.
Of course, the pandemic changed the way we work and many companies are now also offering permanent ‘work-from-home’ options – this can be a great advantage for staff with long commutes, or young families, for example, but any decisions around this also have to be right for the business.
That said, if you do think this arrangement is practical and you’re hiring, it’s important to acknowledge that if you’re not expecting people to work from an office base, then the talent pool is wide open – you might have great success in filling vacant positions with people located in other states and territories, or even other countries.
Having an employment policy that allows people to “work from anywhere” can also be a good way to retain younger staff, particularly those keen on travelling and having other ‘life’ experiences.
Supply Chain hiccups are going to continue for some time, so plan ahead as best as you can – invest in good software to take away the guesswork – and be honest with your customers about which costs will be passed on. Communication is everything if you’re putting up your prices, or have unexpected wait times, and your customers will appreciate it.
Don’t forget that price rises can present a good time to renegotiate payment options – discounts for those who pay promptly and payment plans with strict terms for others. Make sure you always have multiple payment options available and, where appropriate, do credit checks.
Without a doubt, these are pretty big hurdles. But they could also be ‘game changers’ for your business, meaning that there’s opportunity on the flipside of every problem if you look hard enough.
Disruption of all kinds and a degree of economic uncertainly will continue to prevail so it might be the perfect time for you to completely rethink your business model and your strategy. And, changing things up can be really invigorating.
Take a look at our five-step process and see if it inspires some new ideas. It’s just not easy to predict what lies ahead, so adaptability and the ability to think creatively are what you’re going to need to keep ahead. Are these attributes embedded in your culture?
We’ve been working with small businesses across a range of industries for many, many years. We do understand what you’re going through. So, remember, our team has a range of professional skills and experience in accounting, tax, and business mentoring. We also offer a range of outsourced financial services. Right now we might be able to offer you fresh eyes and a fresh perspective to consider, too. If you’d like to make an appointment, you can do that here.