Central Highlands, like many other regions, has been affected by the downturn in the mining industry and severe weather conditions. Whilst the Central Highlands has a diverse economy, these factors inevitably have flow on affects in all areas in the region’s economy. In times like these it is good to step back and evaluate your business to see if any changes are required to help ensure its viability in the short term as well as its longer term sustainability.

There are a number of areas that business owners need to consider to efficiently run their businesses but equally to position themselves to be ready to take advantage of opportunities as they arise:

• Cost management and cash flow
• Strategy and planning
• Divestment
• Governance

Cost management and cash flow

Managing costs is a necessity, however, conventional ‘knee jerk’ cost cutting may not achieve the desired results. It’s important to eliminate unnecessary costs to help sustain profitability and bolster cash flow. Taking a strategic approach is key and requires an in-depth understanding of the fundamental cost drivers within the business. It’s about building a better business for the future by rethinking the business model, not just by creating a cheaper one. Key to this is operational efficiency. When growth slows and business experiences cost and liquidity pressures, inefficiencies turn into major risks.

Keeping a close eye on the businesses cash flow is also critical in these times. This includes routine cashflow forecasts to ensure that all future obligations can be met.

Strategy and planning All businesses need to plan and grow to ensure survival. Successful businesses have a clear vision for the future of the business and a defined road map to get there. Businesses today need to harness their position in the market place, manage competitive threats and maximise opportunities. A clear strategy and business plan will assist as a footprint for the development of the business and provide opportunity for stakeholder buy-in.

Divestment

Businesses will be considering divestment of non-core or underperforming operations. It’s crucial to plan appropriately and maximise value by presenting the business as robust, financially viable and operationally efficient. Together with established strategies to mitigate or eliminate risks – the perception of business risk from a potential acquirer’s viewpoint is then minimised.

Governance

For those family owned businesses, it may be time to consider the governance structure in place. If one doesn’t exist, it’s never too late to establish one. A governance structure appropriate for the size, complexity and unique nature of the business is vital for long-term success. KPMG Australia has been supporting many businesses in the Central Highlands region to help them navigate these difficult times – and be positioned for success when conditions improve. If you’d like to discuss how we can assist your business please contact Michael Harrold on 07 3233 9606 or mharrold@kpmg.com.au or Grant Williams on 07 3233 3269 or gwilliams3@kpmg.com.au.