We face significant global and domestic issues in this post-pandemic business landscape.
Please understand me highlighting these issues is not intended to be pessimistic or negative. I simply prefer to be realistic in surveying the horizon to observe what is coming at us, before it’s too late.
In this blog, I identify the big challenges I see facing business owners and their teams in the year ahead.
The Economy
Risk of global and domestic recession
High inflation
Impact of Ukraine War
International political instability
Stock market downturn and volatility
Lower house prices
Higher debt gearing ratios
Reduction in discretionary spending
Higher logistical costs in shipping & transport
Real wages growth
Escalating risk profiles with higher insurance costs or inability to secure insurance
Mental Health
Pre-existing post-pandemic mental health issues emerging after lag
Emerging mental health issues for business owners arising from higher inflation, margin pressures, labour shortages and wage growth
Mental health issues arising from higher risk profiles with record debt levels impacted by falling property prices and stock market downturn
Fear of financial ruin as banks increase interest rates, change lending criteria and reduce/eliminate refinancing opportunities
Employee mental health may in fact worsen with remote workplaces and physical detachment from management, teams and colleagues
Remote Workplace
Engagement is challenged
Productivity generally harder to monitor and measure remotely
Management and supervision of teams and individuals more difficult
Leadership messaging may become fragmented, misunderstood or ignored
Lack of clear strategy across organization
Employees
Employee shortages due to less offshore workers, overseas students and net migration to regional towns
Retention of staff and attraction of staff more challenging than ever before
Employees resigning for better wages or conditions
Dilution of on-the-job training and fast-tracking career progression
Reduction in supervision, mentoring and coaching of employees through remote workplace
High cost of housing
Shortfall of long-term rental properties due to shift to short-term rental stay model
Customers
Pricing pressure due to customers experiencing margin pressures
Increased price shopping or discount requests through bundling, volume, rebates or exclusivity
Reduced demand
Competitors
Poaching your talent
Retaining existing talent through better pay and conditions
Price gouging may create downward pricing pressures
Buying market share through low margin, no margin or loss-leading tactics
Suppliers
High likelihood of suppliers increasing prices
Suppliers going under due to economic factors
Risk of supply chain interruptions impacting guaranteed supply of your products & services
Margin Pressure
Inflationary pressure on material and overhead expenses
Higher interest rates
Real wages growth
Increased competition
Reduced expenditure or demand from target market
Wealth Creation & Succession Planning
Significant reduction in net worth due to higher debt and lower profitability
Net worth reduction due to lower property prices and stock market downturn
Inability or reduction to fund investment and wealth creation activities
Possible extension of working life and delayed retirement
Lower multiples may apply to business valuations in the future
Securing a buyer for sale of business may become more difficult
Business owners that proactively address these threats and develop strategies to tackle them may reduce, mitigate or even eliminate key business exposures.
If you would like to discuss how I can help you navigate a path through this maze of existing and emerging challenges, please contact me.
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Email me at darren@darrenkbourke.com to schedule a meeting (at no cost or obligation) to discuss how I can help you, your business and your team this year.