Business – Struggling companies – what can you do?

We are seeing it far too regularly – our companies are in trouble. In New Zealand 97 percent of all companies can be described as small and medium-sized, with fewer than 20 employees. These companies are the engine of our country and our region. They generate wealth, they employ our people, they make our lives productive and allow people from all backgrounds and skills to enjoy the time they don’t work – on our beaches, in our cafés and in our stores.  And a lot of those small companies are in trouble at the moment.

I have no wish for this to be a negative diatribe on company failure and despondency, but I can assure you there is plenty of that around. Times are tough. Inflation has had its effect and we are tending to close our wallets as a result. That affects those small companies that rely on local spending and activity.  Revenues decrease and cashflow comes under pressure.  Mismanagement is always identified as the prime reason for company failures, but when times are tough the margins between good management and poor management become very narrow. Some companies can be one bad decision away from failure, leaving no room for mistakes.  

So what can business owners do, and what can we the community do for our local companies? Business owners need to react quickly to changes in market conditions. Speed and adaptability often don’t go together well – it can take time to change effectively – but at times such as these it is essential to respond quickly. Diagnose issues with your teams; one brain will not be as effective as many. Don’t throw solutions at problems willy-nilly. Be sure of the problem first, and look at fixing the cause, not the symptoms. If your sales are decreasing, and you foresee further falls and a longer-term problem, you must cut your cloth to suit. You must decrease your costs immediately. Unfortunately that may mean job losses, especially in operational roles. If you make these moves quickly and effectively, you will ensure longer tenure of remaining staff.

When cashflow is being affected it is imperative to talk with your bank at the first sign of a looming problem – don’t wait for it to materialise.  Keep communicating with your accountant too. They can help. There are many articles and opinion pieces being published pushing innovation as the way to get through a business crisis. But quite frankly, you will not have time to come up with fancy and untried ideas. Spend that time instead being pragmatic and looking into the principles and foundations of your company – revenue, costs, stock, cash and staff.

As local residents, what can we do to help? Buy local! Don’t look elsewhere – we have plenty of shops right here. Use our local service companies, and let’s make sure those small companies, part of our community, survive to thrive when things come right. Because they will!