Key tasks to keep your firm in good shape, even in foul weather

When times are good and profits come freely, some business owners tend to let their guard down and not do the careful and detailed housekeeping that is necessary to keep their enterprises thriving. 

Even when everything is humming along nicely, a business could be only one or two storms away from upheaval and catastrophe, as our country has learned, sadly, over the past few weeks. 

Below are eight key things we all need to be doing now to make sure we are as prepared as we can be for the year ahead. 

Some of these tasks may seem simple, but nonetheless, they are important. 

And with regard especially to preparing for weather-related disasters, there are a few simple issues that businesses and the self-employed could look at to lessen the severity of the impact on their operations. 

1. Repay debt ASAP. With interest rates likely to be 7% or more for 2023, it's time to get your debt down as much and as fast as possible. If that means selling a few assets for less than you might have got a while ago, then so be it. Now is not a time to be beholden to your bank. 

2. Fix your interest rates if you have not already done so. 

3. Review all your costs. Go through them line by line. What costs can you remove? 

4. Review staff performance. There will be some workers you simply can't afford to lose and some you may wish to lose. Consider this: if they go, who will you replace them with, and will they be any better? It’s a great time to identify and reward good staff and to actively work to replace poor performers. This may take some time.  

5. Look at your working capital. Many businesses are carrying too much stock (as a result of logistics uncertainty) and often it’s in different warehouses (additional rent costs). Review your inventory. Do you really need the just-in-case-we-get-an-order-for-it stock? This also applies to debtors. Look hard at all aspects of the “locked-up” capital in your business and start improving it. It will release cash. 

6. If you are investing, be patient. The days of annual returns of 20% plus are gone. It's now about the return of capital rather than the return on capital. I always get nervous when advisers start to offer junk-grade bonds as a means to get better returns. Review your asset allocation (your statement of investment policy and objectives, or SIPO) and make sure you understand your risk profile. The ride will be bumpy for a few years yet, so you will have to take a longer-term view and be patient. 

7. Review your prices for goods and services. That does not mean just annually. This is, however, a tricky exercise. If you put them up too much, you might lose sales, but if you don’t put them up, you will be going backwards. 

8. Look at your customers and suppliers. Who do you work well with and make money from, and who is difficult? Are there opportunities to grow sales channels, or to get better terms from suppliers? 

When disaster strikes

The recent weather emergencies tested our resolve and the fickle nature of our country’s infrastructure.

Businesses were affected in different ways depending on what impact the disasters had on their operations, and those of their customers. 

Regardless of the severity, however, there are some simple things businesses and self-employed people should be doing and/or looking at: 

1. Insurance. Check what cover you have, and if your business does suffer weather damage, be sure to document it photographically and get in touch with your insurer ASAP.  

2. Cash is king. As a result of Cyclone Gabrielle especially, many businesses found they could not rely on eftpos and had to revert to cash sales. Make sure you have cash available to buy goods if needed, and also have a standby system for receiving cash, even if you usually operate as a cashless business. 

3. Maintaining contact in an emergency. If the cell network goes down, do you have an old-fashioned copper-wire landline with a non-powered phone? Can you ring your main customers and check to see if they are okay?

4. Protecting your supply chain. Will goods you order get through to you, and how long will it take? How much more should you order, and how far in advance? 

5. Alternative energy. Do you need a generator to keep goods cold or chilled if the power goes off? How much fuel will you need for it? What about a solar power system, although this will likely need a battery back-up to store the energy? (If your car is electric, could its batteries be suitable for this purpose?) 

6. Staff welfare. How do you check in with your team and make sure they are okay? Do you have a plan to make sure everyone can report they’re okay, or if they need any help?

7. IT. Do you have a back-up system and/or access to cloud-based data storage so you can link with systems and data from computers at other locations in the event of business interruption? 

8. Security of premises. Are your business premises (and home, for that matter ) in a location likely to be vulnerable to the impact of storms? Eventually, you will be unable to get insurance if these severe weather events continue, so think about whether you should relocate your premises or home to somewhere less likely to be affected.

The key is to look at what actually happened to businesses badly affected by the recent storms and learn from their experience. 

History tells us that these disasters will occur again; we just don’t know when, or how disruptive they will be.