How to Survive 2023 - an opinion piece
Updated: Jul 14
As I have been doing our own 2023 budget I have been struck with the numerous difficulties facing small businesses in the 2023 financial year. There is an environment of rising costs, owner fatigue, difficulty getting (and retaining) key staff, shaky consumer confidence, rising borrowing costs and inflation, an unprecedented rate of technological changes, and above all uncertainty and difficulty predicting sales.
My personal belief is that 2023 will sort strong businesses from weak businesses. So how should small businesses prepare for this difficult year? There is a million things business could (and should) do but it's easy to get lost in possibilities and discouraged by the complexity of the task so it's very important to break that task into some key focus areas. We have listed some general comments about what we believe will be key attributes/planning opportunities below. These are general statements that may or may not apply to your specific business but are certain things you should consider.
Now is the time to go through your expenses and review which of the business costs are necessary/useful / value for money. Keep an eye on your debtors to make sure you receive payments on time and are not accruing bad debts. Plan to have money set aside for upcoming outflows like BAS, asset purchases, or large stock orders. Is there any old stock sitting on the shelf which can be liquidated to improve the cash position?
It is a fantastic idea to do up a 12-month budget and review your monthly business performance against that budget. You’ll be surprised at the insights for your own business that you gain from this process. The budget should be a ‘living’ document and constantly updated when key assumptions change. A key part of the process is explaining to yourself why a certain budgeted expense has blown out or a sales target has not been met. We can help you create a budget and provide a monthly report.
As one door closes the next opens. Successful businesses will be those businesses that can seize the opportunities that present themselves. Those businesses do not have bloated pre-existing expense commitments – they are tightly managed with lean expenses to enable them to grasp those opportunities when they present themselves. Where possible they have flexibility in their pricing model to change pricing as the market changes so they don’t get stuck when their margins get squeezed. Make sure you don’t get stuck in the ‘that’s how we’ve always done it’ mind frame.
Stay in touch with your market
Prices will be changing rapidly over the coming months. Costs will increase, competitors will be raising prices, there will be new competitors and old competitors will disappear. Bricks and mortar are making way for online stores. Change is in the air. What does that mean for your business?
Up to date knowledge matters
Keep your books up to date. We recommend online accounting packages (such as Xero). If you are still using an old-style accounting package that does not have live bank feeds, expense rules, automatic invoice reminders etc then you’re probably wasting time (or money) on bookwork rather than working or investing in your business and looking for opportunities. Do you only talk to your accountant/business coach / other business guidance once per year? They will see trends in business performance as they happen - maybe you should do a regular check-in instead? At minimum – the quarterly BAS is a great time to ask about their view of your business performance for the previous quarter.
Working on vs Working in your business
Most business owners get caught in a cycle of working in your business (day-to-day work) rather than working on your business (improving what you do, strategic thinking, planning, accountability). It is crucial to set aside time to work on your business.
Plan for contingencies
What will you do if that key staff member leaves?
If predicted sales don’t eventuate?
If your costs increase?
How will your customers respond to a price increase or change to the service you provide?
We’re always available for a chat and to discuss what your business needs and how we can help. Simply get in touch with us to book a time.