What's New At Credit Matters?

In case you were wondering about the April, May and June newsletters, in view of the COVID-19 crisis, it was decided not to issue the newsletters in these months.

It was felt that with people’s minds on more urgent matters, the finer points of business would be overlooked in short term as other matters took priority. The situation has now calmed down and to some degree business people may be more prepared to focused on how to operate their business efficiently during the recession.

Since our March newsletter, we have been busy developing an updated version of our Tradies Guide, and another new feature, “Buying or Taking Over Another Business” is now available on the website.

In addition, as you know, I have continually spoken over the years about the importance on avoiding mistakes and trying to reduce costs. With profitable sales being at a premium in the coming years, a new calculator has been designed to help you identify the cost of replacing lost capital as a result of poor business decisions. You will find our new calculator, the “Sales Capital Cost Replacement Calculator” at www.creditmatters.com.au 

Quote Of The Month

Why can't you see

What you're doing to me

When you don't believe a word I say?

We can't go on together

With suspicious minds

And we can't build our dreams

On suspicious minds

From Elvis Presley’s song ‘Suspicious Minds’

Monthly Business Observation

It has not taken long for the level of trust to be shattered in all our lives due to the effect of the COVID-19 virus and the sudden declaration that we are in a recession. Nobody is waiting for the usually economic definition of a recession. All and sundry are now stating emphatically, the recession is here!

No aspect of our lives has been spared and the effects are showing up in our daily lives, interactions with governments, bureaucrats and legislators, sporting communities and businesses. Trust has been eroded and has caused immense angst, which has often resulted in irrational behaviour. Worse still, as we have also seen in the last few months, there is no longer trust in what were formally well thought of charities.

In regards to the commercial world, we are seeing the foundations of business respect being cracked wide opened with some of the largest business enterprises suddenly failing, others exposed as virtually trading insolvently, or without any financial reserves to help them survive over the long term, let alone for the short term. What is most frightening about this state of affairs, much of it has happened within only one or two months of the declaration of the COVID-19 pandemic.

Moving forward the disillusionment of many business people whose trust in others has been so badly broken will be a real problem. No longer will blanket respect, or naivety of people be awarded to the icons of business, large corporations or even their business friends. As Elvis’s song depicts, suspicious minds will be everywhere, which is going to affect us all and our dreams for the future.

This lack of trust will also be building up in business and their employees where either party is not honouring the intent of the Australian Government’s JobSeeker and JobKeeper programs with their employees. If either party abuses the process, then distrust will build up in that business, which benefits nobody in the long term.

On the other hand, now is not the time to make short-term decisions in panic mode that might destroy long-term relationships and your reputation in the business world. No matter how serious the situation might appear currently, there is a right way and a wrong way of going about of dealing with the situation. It is imperative, as part of your long-term survival, that you maintain disciplines and good communication with all your stakeholders and in your language.

It is all very well to say, “… but if we don’t survive the short term, we don’t have a business!” Equally important however is to understand that if you approach your situation in the wrong manner, yes, you may survive the short term, but if nobody trusts you again, you still may not have a business.

If trust has been so badly broken; how does a business overcome such negativity with its suppliers, customers and employees? For a start, we need to revert to the basics of good business, which apply in any economic environment. These basics include, a good corporate culture, with due respect for the needs of your various stakeholders and dedicated employees. In addition, paying all debt owed in a timely manner and keeping debt owed to you to as little as possible, also provides a good chance of the business surviving, all things considered.