This panic will pass

Don’t get caught up in the market panic. Think calm, be calm and avoid taking short-term decisions that will hurt your business. COLIN BENJAMIN

By Colin Benjamin

Yes, equity markets have fallen to levels that have not been seen for decades, but it is not the end of the world as we have known it.

We are seeing the consequences of the failure of governments to encourage savings and restore confidence. Sovereign funds are being forced to hold up the good banks while letting hundreds of private funds go to the wall so that small and medium enterprise has somewhere to turn for credit.

As the finance ministers of the G7 and G20 meet to prepare a response to the global financial crisis, we are seeing the impact of the failure of markets to recognise that there has been a dramatic shift in consumer confidence around the globe that reflects fears about jobs, climate change and political instability of incumbent governments in most countries around the globe.

Think realistically – the panic attack will pass. Dust off those business and marketing plans that we have been talking about for the last few columns, and sort out which customers can be treated.

Think about the capabilities that would be most effective if you can get long-term contracts and lines of credit, rather than worrying about the present relatively tough times that are facing your more marginal customers and clients.

Remember that a panic attack only lasts a short amount of time, as you start to adjust your terms of trade and focus on the parts of your business that generate the best prospects. In fact, a panic attack is protecting you by giving everyone pause to think and plan for the longer-term prospects of your business.

In these turbulent times with high market volatility, it is vital to remember a situation does not create your fear, it comes from how we perceive the economic and political context in which we make longer-term business decisions. Don’t sell in a hurry when companies that are hassle-free offer short-term advantage deals. But by the same token, don’t continue to carry on loss-making efforts that are propped up only by hope.

Take the time to meet with your management team to decide priorities. Identify what can be deferred and delayed until the current crisis is resolved. Think calm, be calm, and then get back to the basics of your business by addressing your achievements and avoid taking short-term steps that discount your future prospects.

Enterprises that focus their efforts on working things out with their best customers, adjusting terms of trade and being prepared to work hard to maintain their cashflow, can reduce day-to-day anxiety more readily than those that rush around desperately discounting and hoping for something good to happen to them. Be realistic about credit checks, do your homework before signing new contracts and focus on building your networks and contacts.

Despite all the worst fears and the brokers’ desire to sell stocks, Australia is well placed to adjust, cut its deficits, expand domestic production and rely upon small and medium enterprise to remain the major source of new employment.

It is up to Wayne Swan and Lindsay Tanner to encourage the banks and super funds to inject liquidity into these enterprises and find ways to encourage domestic production and reduce our dependence on imported goods and services.

That’s the proper response – don’t panic.

Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton. 

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