While it’s improbable that any of us can accurately predict the future, we can make plans for contingencies we will face. David Underwood believes print businesses can take advantage of some common sense rules to do just that
I can understand the concerns of business people when considering the future.
The pundits were all wrong with their last three major forecasts. They were that the New Zealand dollar would now be down around 55c US, that the National Party would romp home with the election and that we were facing a long, hot and dry summer.
What those forecasts show is that you should do your own thinking, reach your own conclusions and act accordingly. The thinking part should be well researched as part of a careful process. Be suspicious of opinions from those who may have a vested interest in any outcome. Inquire about the accuracy of prior predictions and whether they really know what they are talking about.
I am often asked what will happen to our exchange rate. I am not sure why they ask me but guess it is because I have survived in business for many years. My explanation is that if it does not go up it will go down unless of course it remains unchanged. I simply do not know.
If anyone knew what the exchange rate was going to do then I am sure they would not be working for a living. The fact is that, with a floating exchange rate, no one knows how it will change.
What all this means is that, when making your decisions about how to proceed, you need to have a plan. I am sure the skipper of the Rena had a plan but it does not seem to have covered what actions to take to check on progress.
Plan ahead
For your business to survive and prosper, in these troubled times, you must have a plan. That means thinking about the worst possible events that could happen. You need to think about the unthinkable. Your plan will cover how to deal with such events and when any early warning signals will show up.
If your business is running satisfactorily, then I suggest the first area to check should be the external influences. Make sure you know what is going on in your industry, and your area, and find out what is happening with your competitors. I presume you know who they are.
Review the past sales to your 10 best customers and go and see them and discuss their likely requirements for the year ahead. You need to know what they are planning for the year and that they are happy with the product and service you are providing.
Make sure you know who the real owners are and whether they are contemplating retirement, retrenchment or perhaps a sale. You will have real problems if a major client sells and the new owners switch suppliers.
Think about what you would have to do to survive such a drop in turnover.
How are you placed with your premises? If they are leased from a third party get the current lease, check the termination date and see what renewal rights there are. The time to negotiate further rights of renewal is well before the contract time is up. If the lease time is in its final stages and it runs out in say two years time then the sooner you know about it the sooner you can sort it out.
Check your cover
There can be really negative external factors from the weather and things such as a local equivalent of the Christchurch earthquake. Contact your insurers and your brokers and make sure that all such risks are covered. Get the details in writing and keep copies in secure places away from your premises.
The cover must include losses arising from plant breakdown or power failures as the consequences can be fatal. The devil is in the detail and no doubt you have read about the Christchurch claim for loss of profits resulting from the earthquake. The particular premises were not damaged as it was the surrounding area that was severely damaged. The loss of profits claim was turned down at first because the loss was the result of a lack of customers and not damage to the premises.
The fact that the problem arose because of the earthquake was claimed to be outside the terms of the insurance cover. No doubt there have been meaningful negotiations since then but the actual outcome is not known.
One final matter is keeping in touch with your suppliers. It could be a disaster to lose some special agency or supply relationship.
The above are some major matters you need to have under review as part of your plans for the year. The outcome will be of major assistance in deciding whether it is full steam ahead or proceed with caution. It is your call.
Next month I will deal with internal matters.
