Family business: the other side of COVID-19

Has the pendulum swung too far?

It is evident the pandemic created many challenging situations for CEOs where they were required to act quickly on problems their business faced. But is it now time to stop, reflect and reassess? As we near the end of the year where we become fatigued, the effects of the pendulum can start to surface, and these issues should be addressed.

Supply chain and stock levels

Supply chain caused huge issues for businesses during COVID-19. Initially factories were closed in China, there were delays, increased freight costs, and a real uncertainty on when stock would arrive, which also disrupted manufacturing.

Good customer service was difficult to provide as businesses could not advise on when the stock would arrive. To overcome this issue, many businesses ordered extra stock so they could deliver to their customers, but now businesses are finding that they have too much inventory. Being overstocked creates new issues such as funds being locked up that could be better invested in other areas of the business, stock going out of fashion or out of date, and additional storage costs.

The ongoing battle for talent

The last twelve months we have seen a battle for talent – another major issue to come out of COVID-19. As a result, wages have been on the increase and businesses are aware they need to be paying at least market rates to attract talent. If sales are high in your business because you have had a successful year, you probably aren’t worried as the profit amount may be the same. However, if hard economic times hit, and you maintain the current level of wages, your profit will suffer.

Good times and the current climate meant businesses accepted the wage increase, but with an economic downturn on the horizon, they may need to consider other options. For example, instead of your business paying a higher salary to a candidate, should you consider investing in technology and training of your current workforce? This would mean your business would have less full-time employees, but with potential to reduce wages back to the same percentage of sales as pre-covid.

There is no denying we are heading into challenging economic times, so it may be a good opportunity for you to review your financial statements and look at other options for talent, so your business does not feel the post pandemic effects too harshly.

We’re here to help

Think it’s time to reassess? Our Family Business Advisory team can assist you by holding a two-hour meeting where we perform a high-level review of your financials to ensure that you’re in a strong position for the year ahead.

Contact our team today for help to restrain the pendulum effect on your business.