Posted by Lynsey Sutherland on 20 August 2014
Few businesses successfully predicted and prepared for the global financial crisis (GFC) that shook the world in 2008. Learn from past blunders and ensure your business has the tools to avoid a repeat performance.
Identifying areas of weakness
The Robert Half Salary Guide asked a wide range of organisations what mistakes they made before and during the downturn that they would not make again. Interestingly, the answers varied considerably depending on the size of the business. Have a look at the five most common mistakes below and identify the ones your business is most likely to make.
1. Poor cash management
The study found that 48 per cent of businesses believed inadequate financial management was a significant mistake and one they would take pains to avoid repeating. The issue was most prevalent among small businesses, with 83 per cent citing cash management as their biggest mistake. This problem was not reflected as strongly in medium and large businesses, which cited 27 and 23 per cent, respectively.
2. Failure to adapt
Overall, 24 per cent of businesses said that failing to adapt was their biggest mistake. The issue was strongest for large businesses (39 per cent), but medium businesses weren’t far behind (30 per cent). Small businesses, on the other hand, didn't rate this error highly, with only 6 per cent identifying it as a problem.
3. Poor risk assessment and management
Some organisations also identified an inability to successfully predict and manage risks as a major issue, with 29 per cent of large businesses saying this was a mistake they didn't want to repeat in the future. 22 per cent of medium and 10 per cent of small businesses claimed likewise.
4. Failure to react quickly enough to the downturn
Slow reaction time was another problem for many businesses. 34 per cent of large businesses and 18 per cent of medium ones believed this was a mistake they shouldn't repeat. Though only 5 per cent of small businesses felt similarly.
5. Lack of investment
For a business to remain agile, it's necessary for them to invest in the future as well as maintain their current success. 30 per cent of large businesses felt that a lack of investment was a misstep they wanted to avoid in future. 18 per cent of medium-sized businesses agreed.
Don't doom your business to repeat past mistakes
Worryingly, 55 per cent of businesses surveyed reported that they believed that, in general, businesses were very likely to repeat the same mistakes they made during the GFC. This number was somewhat skewed by small business respondents, 90 per cent of whom said that businesses were very likely to repeat mistakes, compared with 21 per cent of medium and 37 per cent of large businesses.
The majority of medium and large businesses, 57 and 41 per cent, respectively, believed that businesses were somewhat likely to make the same mistakes they made in the past. Ensure that you learn from past errors and put new processes and safeguards in place to recession-proof your business.
For a closer look at a variety of industry trends and business outlooks, be sure to check out the Robert Half Salary Guide.