If someone had told you in 2019 that within 18 months almost every economy in the world would be shut down – with most of the world’s population working from home – you might have called them crazy!
But here we are, more than two years later, and we continue to face a changing environment due to the COVID-19 pandemic.
Sadly, it has been a distressing time for many businesses, particularly those that rely on foot traffic and tourism to survive. While the road to recovery may be tough, there is much we can take away from the experience. Challenges are unavoidable in any business journey, but every challenge provides an opportunity to learn and grow.
With this in mind, RSM Principal Business Advisory Thiru Kandiah offers some critical lessons we can all take from the pandemic as we step into a new year.
Digital is the future. Today’s consumers demand fast, efficient and personalised experiences which are difficult to provide using traditional manual and paper-based processes. Remote working is also near impossible to achieve without digital transformation – be it cloud storage, VoIP, or video conferencing tools.
“If your business is still relying on legacy methods, 2022 is the year to examine how advancing technology, including artificial intelligence, can help reduce costs, drive efficiencies and improve staff and customer experience,” says Thiru.
Marketing must reach customers where they are. While marketing used to mean street signs, event sponsorships and TV ads, now more than ever digital is one of the main remaining avenues for effective marketing.
“When considering your 2022 marketing strategy, make sure it includes a healthy allocation for digital spend,” says Thiru.
The COVID-19 pandemic certainly proved how important it is for business owners to know their numbers and budget for unknowns. Setting aside time to review your business cashflow fortnightly or monthly allows you to always know where you stand and be proactive if a difficult situation arises.
Remember the ATO is a creditor so tax obligations should always be part of your cashflow planning. While the ATO was relatively lenient during COVID-19, this will certainly change in 2022.
“If you can’t pay tax debts as they fall due, engage with the ATO to negotiate a payment plan early on to avoid penalties or more serious action,” recommends Thiru.
Life doesn’t always go to plan so if you notice that cashflow is tight, especially with interest rates set to rise, be prepared to act. Have a chat with your lender and renegotiate loan terms before things get out of hand.
“The smallest changes to business processes can have the biggest impacts – especially when every cent counts,” says Thiru. “Next year, assess your customer payment terms and consider implementing a mandatory deposit, shorted payment terms and your processes to follow up debts quickly.”
The way your business is structured – as a company or trust, for example – can make a huge difference in terms of tax efficiency and asset protection.
“If you’ve never had an adviser review your business structure before, make it a priority in 2022,” says Thiru.
Australia was in the midst of a skills shortage before COVID-19, which has become even worse with limited movement between cities and countries. Now more than ever it certainly pays to be an employer of choice, where skilled professionals choose to work with you because of the flexibility, culture and meaningful work on offer.
“Take the time to prioritise employee experience next year, and build a reputation as a place people love to work,” says Thiru.
“And be agile. An agile business responds quickly to change, and isn’t afraid to fail if it means finding the best way forward faster.”
While many business owners get by without a business plan, no business is as effective as it could be without a business strategy.
In 2022, set aside a day every month or quarter to review how your business is tracking, the current landscape – including your competitors – and any risks and opportunities.
To book a free business health check, or to chat with an experienced business adviser, contact your local RSM office.