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SMEs need to be vigilant as 2019 brings more volatility

SMEs need to be vigilant as 2019 brings more volatility article image

As 2019 gets underway, Australian businesses in all sectors face increasing global volatility, uncertainty, and unpredictability, according to insolvency and business turnaround practitioners Mackay Goodwin.

“When organisations start to collapse, it could be a sign of trouble in a specific industry,” said Domenic Calabretta, managing director, Mackay Goodwin.

“Companies should therefore keep an eye on insolvencies in their industry as an early warning for their own businesses,” he said. 

“Being vigilant could be the difference between turning the company’s performance around or facing insolvency. It’s important to keep a close eye on cashflow in particular, as this can be a key early warning sign that all is not well.”

Mr Calabretta says in a volatile market it’s important to avoid unnecessary risk.

Organisations should start by developing a strategy for growth, then ensuring they stick closely to this strategy.

“Any deviation could introduce unnecessary risk, so those deviations should be avoided unless they are certain to add value,” he says. 

Global uncertainties

“A volatile global market is likely to bring disruption to the local economy. Global uncertainties include Brexit, ongoing US protectionism, a potential hard landing for China, and more. This means organisations must proceed with caution.”

Business leaders must always look at improvement and innovation within their industry, says Mr Calabretta. This includes investing in those areas which will increase performance and streamline operations, as long as these opportunities fit with the business’s strategic plan.

“If leaders start to see warning signs that the business may be facing difficulties or even insolvency, they should seek expert advice from qualified insolvency practitioners immediately.

“With the right advice, business leaders can manage cashflow and pay debts, and even maintain access to finance.”

Options for struggling businesses include restructuring or voluntary administration. Businesses that have done this have been able to turn their performance around.

“However, it’s not something to try on your own,” Mr Calabretta says.

“Working with a reputable corporate advisor can dramatically improve the company’s chances of success and reduce the personal risk for company directors and other stakeholders.”

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