The Big Challenges in 2023

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.

 

I write blogs & videos just like this one on business, productivity and human development. If you'd like it delivered straight to your inbox head to https://darrenkbourke.com/the-fourth-moon-blog and let me know your email.

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.