Edition 330 – Mid Year Report Card

So, here we are! One day off the end of the financial year and six months into 2022. A lot has happened and a lot continues to happen. Here’s what I’ve seen and what I’m hearing, in and around family businesses.

1. Staff – if you can’t find them, you’re not alone. It’s not just an Australian issue as the phenomenon is global. My prediction is that the employment market will be tight for a while, until some of the corporate collapses that are coming, free up the labour force.
2. Teetering – there are plenty of businesses that are right on the edge, financially, at the moment. No matter which business you’re dealing with, or for how long the relationship has been underway, make sure you check, constantly, that your customers can pay your bills.
3. Cash Reserves – are appallingly low in too many businesses. Too few have taken the opportunity the past two years to stash the cash for a rainy day. Even a multi national that deals with a client of mine has only 3 weeks of operating cash sitting inside their business. Sure, they can borrow – it’s a question of whether their bank will lend.
4. The Australian Taxation Office – are getting tough on outstanding collections, quickly. They went soft on overdue debt when COVID struck in 2020. However, the ATO are becoming very vocal (at public events) and very active about following up businesses that are falling behind on their tax obligations. My guess is that liquidators are about to become very busy, courtesy of the ATO.
5. Supply Chain disruptions – are still disrupting. What strikes me as bizarre is that after two years, business owners are still complaining of this and haven’t developed a Plan B. One business I know of that did, and is constantly buying stock up to 12 months ahead of when it is needed, is in the middle of a significant purple patch in their business at the moment. Why? They have stock and their competitors don’t.
6. Federal Government – my guess is that some significant measures that aren’t anti-business, but are certainly not pro-business, are about to unfold following the May election. The noise in the media around changes to business programmes and superannuation is getting louder, which can only come from backgrounding from the new Government. I wouldn’t be surprised if, for instance, the Instant Asset Write Off measures, due to expire in June 2023, are finished up early.
7. Trading cliffs – a number of businesses are “flat stick” at the moment, doing the work that’s right in front of them. However, too few are not preparing the field for the next crop. When I ask business owners, “what’s coming up”, I’m greeted with a chorus of “we’re too busy to worry about that right now”. If that’s you, take a lesson from farmers, who are planning the next crop well before they harvest the current one.

If all of that sounds gloomy, it’s not meant to be. It’s a wake-up call. For every business I see that is not only aware of those issues, but is across them and continues to plan ahead for them, they’re firing right now. What about you?

This Week’s Tip

“The extent of long term planning in family business right now is incredibly weak.
Too few are looking far enough ahead to identify opportunities and impending threats.”