Tough times build resilient businesses

Written by: John McCluskey, Managing Director Whizdom and APSCo Director

There is some truth in the old saying “tough times build tough people” and it is equally true for businesses. Many businesses starting during the pandemic may have undertaken the step into entrepreneurship during the peak of boom times with Government throwing cash into the economy like a professional gambler on the poker table.

Interest rates were virtually nothing, money was cheap to borrow and there seemed to be no limits to what people would pay to secure talent, whether it made business sense or not.

Many recruiters may have over capitalised, borrowed, hired staff they would not have normally and paid them far more than they should have.

Took advantage of ATO generosity of delaying paying taxes to invest in growth and living on what seemed an endless supply of generosity and opportunity available to business.

Candidates were king and demanding salaries and rate increases to reflect newfound lifestyles, working remote, having a flexible work life balance, getting offered 4-day weeks, extra leave and this was going to be the new norm.

So, what happened? Basically, everything started to revert to the centre, and normalise.

The ATO wanted their tax, interest rates moved to move inline with long term averages.

Efficiency went down, so companies wanted people more in the office. With increases in efficiency and adoption of AI, organisations' business will need fewer people. Suddenly, less money is flowing through the economy, with increased business costs, higher interest payments, increases in utilities, complex IR reforms, increases to state taxes and insurances, and suddenly, within 12 months, times are a little tougher.

Those companies that did not overextend and put a little away for a rainy day are probably travelling bit better and finding times like the GFC.

If there is any good news it is there is more availability of good talent and more realistic salary and rate requirements from candidates.

Some businesses may continue to downsize, or the new term “right size”.

Don’t think this is a failure if it saves your business as upturns are like climbing the stairs and down turns are like going out the window

So tough and uncomfortable decisions can often be the right ones, if it’s the difference between opening or closing your doors.