I hate to sound like a pessimist but without the mining boom and our resources revenue stream, what would our economy really look like? Big manufacturers have been winding down production and axing jobs. Our services sector isn’t the powerhouse it should be. Small businesses are bound in red tape and bricks and mortar retail is in the doldrums.
So, let’s say consumer and business confidence is hit hard, and spending flatlines – how would your business pull through? Management actions for tough times
There are two sides to this business equation: Cost cutting and revenue generation. You need to manage your overall business costs more efficiently as well as create new opportunities for revenue growth.Cost-cutting
The first thing you need to do is assess your cash flow. In good times and bad, you need to have a firm grasp of what you have to pay out, what your order book looks like, and what income you're owed.When it comes to staffing levels, you don’t have to focus on retrenchments. There may be people in your company who would prefer to cut back on hours and job share. Would any of your employees prefer to be contractors and work for short stints when you need them?
The next biggest business expense is probably your business premises. Having unoccupied desk space is costing your business money. These days, there’s certainly a business case for encouraging flexible work practices and encouraging staff that don’t physically need to be in the workplace to do their jobs remotely, while providing a shared space for them at the workplace when they need to be on site.
Next scrutinise your inventory, rationalise your stock and renegotiate your contracts or find hungrier suppliers. In terms of day-to-day business costs, can you use Skype in your business instead of expensive landlines. Can you take advantage of professional services in the cloud? You can also cut costs by taking energy efficiency measures and reusing and recycling.
Revenue growth
As part of your business strategy you should be conducting research with your customers to find out what they need, and what will keep them coming back to you. Selling more products and services to existing customers is far more cost effective than finding new ones.
Are you in step with the consumer and business shift to mobile everything? Innovating your business model to take advantage of this trend, must be a big priority. Indeed innovating your products and services could mean you’re eligible for the R&D tax incentive which is designed to encourage more companies to engage in research and development activities. To qualify, R&D activities are defined as the experimental activities that produce the knowledge to develop the new or improved products or processes. These may be offline experiments or production based trial activities.
Tough times
The Reserve Bank estimates that investment in mining will start falling not growing, and therefore subtracting from Australia's economic growth, sometime in 2013-14. On this measure alone, you’ve got a good eighteen months to put some stringent business management practices in place.
