Simon Tombs is Managing Partner of Monahans,
Wouldn’t it be great to have crystal ball? Although even with one we’d have been hard pressed to predict the turbulent times we – individuals and businesses – would face since March 2020. In two and a half years, the COVID-19 pandemic changed everything and agility has become a business’s best friend.
The true test of a company comes in weathering a storm. Brexit, COVID-19 and now the war in Ukraine have all collided to form the ‘perfect’ storm for businesses, with soaring energy costs, unprecedented difficulties for supply chains and unmanageable staff shortages as the workforce tries to navigate the changes of the last two years.
But, as there’s calm before a storm, so will there be after. It may be a little optimistic to say that it’ll be plain sailing from here but what we do have now that we didn’t have before is the knowledge gleaned from these events. Looking back and drawing learnings will give businesses and individuals a better ability to be in control in the coming months. And control is key, especially in such uncertain times.
With so much out of our control, it’s important not to get overwhelmed. Rather, taking command of what you can control, amidst other uncertainties, will ensure you retain a solid grasp on how your business is running.
Cash is king
The first thing to take control of is your finances. By having a clear understanding of your cashflow, you can dictate what you might need to tweak and adjust in your spending, should tricky situations occur. Cut back where necessary to avoid debt and ensure you keep your future projections in the green.
Projection may lead to pivot
Once you’re confident that your finances are in a stable position, don’t just sit back and rest on your laurels. Even in positive economic times, projections should be constantly assessed to ensure they are relevant, and when markets are in flux, they should evolve accordingly. Keeping an eye on how your projections are materialising will give you a steer on how you might need to adapt business strategy, even pivot where necessary.
Information remains critical
Alongside projections, historical data gives you powerful insights into past events, allowing you to make calculated decisions about future ones. By taking detailed financial reports and tracking up-to-date information, you can build a useful reference for how your business has performed in the past and adapted to previous situations. This information – and how to use that information – is critical to forming a complete picture of your business operations, whether it’s insights into your demand cycle, parts of your business that may be more vulnerable to fluctuation, or your margins as a result of price increases.
Alternatives to wage increases
Rising inflation – to the highest we’ve seen in 40 years – means that the workforce is increasingly worried about the cost of living and is turning to employers for financial support. But we risk accentuating the problem and prolonging inflation if we’re too quick to increase staff salaries – if that is indeed an option.
Instead, it’s worth considering how else you can put more in employees’ pockets with a range of options available, many of which provide tax-free support. Childcare vouchers, benefits in kind, fuel allowance support, gym memberships, maybe even buying your staff lunch once a week – there are a multitude of ways, aside from just wage increases, in which individuals can be supported over the coming months.
Retain, rather than recruit
As the purse strings are tightened, some may encounter problems with staffing, but keeping your staff happy is one of the most crucial pinch points of running a successful business. It’s far more expensive to hire talent than it is to retain them, especially in a market where skills gaps are an issue, so a key focus should be on empowering staff and ensuring they feel valued. As mentioned above, this isn’t as simple as offering pay rises across the board. Your culture must promote collaboration and growth, otherwise these will be sought elsewhere.
Communication is critical to such a culture. And it’s a two-way street – staff want to be kept in the loop about business decisions and also feel like they are being heard when offering their ideas or voicing their concerns. By maintaining a dialogue you will better understand your employees’ emotions and be able to act accordingly. Look after your best asset – your people – and they will look after you.
Don’t be afraid to ask for help
Even with complete clarity on your cashflow and a collaborative company culture, there’s still no shame in asking for guidance to ensure you’re staying on track. Business advisors, who speak to hundreds of businesses every year will have invaluable experience of how economic cycles work and the nuances of your sector. They can be a sounding board for your projections and advise on how other businesses are navigating issues like shrinking margins.
At Monahans (https://www.monahans.co.uk/), this isn’t the first time we’ve been through challenging times and economic uncertainty. We’ve been at the heart of our local business communities for more than 120 years, working shoulder to shoulder with our clients, using our vast experience and knowledge to see them through difficult times.
A lot will be out of our hands in the coming months but businesses that equip themselves with the right tools to control the controllables will be the best placed to succeed in an uncertain and volatile environment. Meanwhile, our door is always open to discuss how we can help you to stay in control of your business.
