ACCOUNTANCY BEYOND THE NUMBERS with Hayes Knight
Good Year, Or More Of The Same?
Phew! 2010 will go down in the history books as a difficult year for most and probably one that a lot of people would rather forget. The big question is, will all of the problems disappear in 2011 like magic (as many people are hoping and praying) or are we in for more of the same?
I have the honour of advising many different businesses and sitting on a number of boards of SME companies, so I am lucky in that I get to see firsthand the effect of the recession and the general lack of business confidence, and in particular the impact that this has on our local economy. There is one thing for certain – whilst the economy may not deteriorate further, it is unlikely that there will be a huge bouncing recovery. We can expect more of the same from where 2010 finished up – a static property market, weak domestic demand, cash flow difficulties and businesses having difficulty accessing capital for growth if they do actually manage to achieve an increase in demand.
The good news is that it does not appear as if things will get any worse. It is likely that the businesses that survived 2010 have put good solid strategies in place already to mitigate the effects of the recession, and as such they should be well placed for the coming year rather than going backwards.
So, on that basis, here are the top five skills that
I think business owners and management will
require in order to successfully lead their teams through 2011:
1. Sight - Ability to see emerging patterns and shift perspective when necessary
2. Insight - Ability to learn faster than the rate of change in your industry
3. Create - Ability to think strategically and critically to gain insights that create new opportunities
4. Communicate - Ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work
5. Inspire – Ability to mobilise support and engage others to join you in action
Of course the business model will have to be robust, the operation needs to be efficient, the capital and equity position needs to be strong and the business needs to be innovative. If your business is missing any one of the above attributes in 2011, then no matter how good a leader you are, and how well you achieve the top five skills you will find it a long hard road.
Now is a great time to be reviewing your strategy, getting your balance sheet under control, reviewing the profit plan and reviewing your future governance structures. Corporate governance in New Zealand SME businesses is often over-looked as it is perceived to be the domain of the big boys. This is a dangerous misconception, as corporate governance does not need to be expensive or complex to be valuable. In a nutshell, good corporate governance is simply a mechanism for accountability. In other words, stating what the company will do in a specified time frame, and then reporting the results. Implementation of a governance structure involves setting the plan, creating templates for the monthly reports, delegating responsibility and providing a forum for feedback. The most successful boards also employ an independent adviser who can bring a world of experience and discipline to the table that is simply not available from elsewhere in your organisation. They are not afraid to ask the hard questions, and have the ability to come from left field as they are not embroiled in the day to day management activities.
Finally, New Zealand is renowned for its culture of innovation. We need to innovate now more than ever, break the cycle and look for better, smarter and more effective ways of doing things.
Remember – businesses need a leader now more than ever. Make the tough calls, put in place the plans and strategies, lean out the organisation and prepare to take advantage of the opportunities as they present themselves. And they will present themselves, after all, this is just a cycle.
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