Money

How to not go bankrupt

Allan Johnson of Johnson & Tennent Chartered Accountants
Allan Johnson of Johnson & Tennent Chartered Accountants Janie Kayes

It is hard for anyone to be unaware of the significant changes in employment patterns in the Australian economy.

Daily, we are subjected to a diet of job losses, redundancies and jobseekers begging for employment. Even in Rockhampton, we are not immune to business failure.

At the same time, we read stories of employers desperately seeking labour for rapidly expanding businesses, particularly in the mining industry. The D&B Business Failures and Start-ups Analysis for the December 2011 quarter noted that 'outside the mining sector, sentiment is generally poor and the strong Australian dollar is straining profits'.

The key industries for business failure were retail, services and manufacturing. If you're in business and you haven't noticed a fundamental shift in your business activities, chances are that you've seen these failures reflected in your customer base.

Clearly the economy is undergoing some significant restructuring, and all businesses need to be sensitive to the changing landscape - whether you are fighting for survival or wondering what the best opportunities facing you are.

Business needs to be adaptable to survive

Even if your core business does not change, it is almost certain that you need to be thinking how you can run your business better.

Given the proximity of the Rockhampton economy to mining areas, we are the lucky ones. We should be faced with more opportunities than survival threats. While these opportunities are available, we need to take advantage of as many as possible during the boom times.

You need to have trusted advisors

Advisors are able to help you adapt and strategically plan. Even if they do not know the nitty-gritty of your particular business, some higher thoughts and ideas (and even a different perspective) can make a constructive difference to the profitable operation of your business - but only if you are open to consider change.

Engaging external help will also give you access to valuable experience - which will help you to avoid costly mistakes. Wouldn't you rather learn from someone else's failures?

Now is not the time for small thinking

Strategic planning is important at all times - none more so than now. Unfortunately, when businesses get busy, planning tends to become short-term and the longer-term implications of our current actions are often ignored.

Taking time out of a busy day to think seriously about the longer-term strategy for your business will help you avoid becoming one of the bankruptcy statistics in the future when economic conditions locally are not so favourable.

Topics:  allan johnson bankruptcy opinion


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