Is The Next Financial Crisis On It’s Way?
The world’s sharemarkets have had a bumpy month. Australia’s housing market is under price pressure and the word is that the same tensions might come here. Europe’s economic strength is again being questioned as a sign they’re on the verge of the next financial crisis. Even China’s once legendary growth rate has slowed.
There’s plenty of commentary around suggesting that things might start to get a bit tough. Some say that we have another GFC coming. Others predict a more mild correction.
Either way, economic factors, mainly happening overseas, but with a sprinkling of our own challenges, will eventually contribute to whatever the next global downturn, or next financial crisis looks like.
Will It Take Us By Surprise (Again) – Or Will We Be Prepared?
Most of us have now lived through at least two and possibly up to four of these major financial collapses. And yet, when they come, they continue to take us by surprise. As the panic sets in, we end up running to our bankers, downsizing our teams or trying to hustle cut-price product out of our warehouses, all with the aim of surviving the downturn.
In other words, whilst we might see it coming, we have not historically been very good at preparing for the next financial crisis. Now that we’re seeing some early signs, I’ve already seen a couple of businesses starting to feel the pain.
Thinking About The Future Is Not A Luxury
But what I’m not seeing, is businesses actively thinking about what they can do now, before the inevitable downturn strikes. What can they do now to build a foundation that gets them through what might be a rough road ahead?
The reason is simple. Most of us are so busy keeping our businesses going, day to day, that thinking about the future is a luxury we don’t have time for.
So, in order to avoid spending three days we don’t have in a crisis meeting, surrounded by whiteboards and post-it notes, in a room without windows, here are a few things we can be doing now, and “in the normal course of business”, that will put our businesses in better shape to handle whatever may lie around the corner.
5 Ways To Prepare For The Next Financial Crisis
Number One: Do you have the right people?
Take a look at your team. Are they the best they can be? If you were going into a physical battle with a real enemy, you would want to have a team alongside you that was up for the fight.
If you have doubts about the capability or reliability of any members of your immediate team, you’re better to fix that now rather than be trying to deal with it when you have new pressures.
Note, fixing that capability doesn’t necessarily mean replacing the person or people concerned. They may simply need additional resource, some training support, or better communication from you, in order to get on top of their game.
Number Two: Keep Your External Advisers Close
Secondly, and while you are talking about your people, don’t forget to do a ‘status check’ on the performance and support you get from your most important external advisers. Again, they are the people that you will be calling on more if you start having trouble. Keep these people close.
Think about the role your banker, lawyer, accountant, and even any mentors you may have, will play in helping you through the maze. Start building or rebuilding those relationships now. Tell them what is important to the business and what your key priorities are. The more they know, the better the job they can do to help you if called upon.
Number Three: Make Sure Your Customers Feel Valued
Thirdly, how about the state of your customer relationships? Most businesses I see don’t know the names of their top 20 customers, let alone be able to talk about the current state of those relationships. Now is the time to get out to those customers, tell them how important they are, and find out what is important to them and why they like doing business with you.
The more you can understand about them, the better the service you can provide. And the better they know you, and the more important you become to them, the less likely they are to drop you when they go through their own crisis.
Number Four: Listen To Those At The Coalface
Get the views from your people closest to the coalface. They will see things that you don’t. Consider all your options. Talking with your team about their ideas, and perhaps some alternative approaches, helps you to focus and shifts your mental state from your current problems to your future opportunities. And of course, you get to increase the engagement of your people if they feel listened to.
Remember, not every idea is a great idea, and even if some inputs end up in the wastebasket, the debate will help you focus on the right things to do.
Number Five: Invite And Listen To Feedback – Even When It Hurts
Finally, be open to input from those closest to you – both internal and external – even if it is about your own performance and difficult to hear. Sometimes this stuff hurts.
But there are very few highly successful people who haven’t had to have hard conversations about their own performance with their closest advisers.
Irrespective of what is around the corner, these five simple steps will see you in better shape to deal with it.
- Do you have the right people?
- Keep your external advisers close
- Make sure your customers feel valued
- Listen to those at the coalface
- Invite and listen to feedback – even when it hurts.
How well are you placed for the next financial crisis if it were to hit in the next month – and what tips or stories do have to share for other business leaders?