This is the new normal
If there is a lesson to be learned from the past seven years in business is that things won't return to the pre-GFC version of normal.
Gone are the days of long-term contracts, loyal staff and flexible lending. You can expect as a business owner or manager that your staff will come and they will go taking valuable intellectual property with them. Sometimes you might find they will stay for years, mostly you will count their time employed in months.
You can also expect that the process to get a line of credit particularly for small business will require many hours of paperwork for you and your staff - with the result being that you might need to mortgage your home.
Contracts will come and go, as will customer needs. Clients will be less loyal and more focussed upon their needs while competitors will start to bite into your market share.
The new normal is about change. At the pointy end of this shift is our media's ability to remind us that the new normal is about job losses, increased personal bankruptcies, downturn in confidence and bleak views of our long-term value as a nation to an emerging Asian marketplace.
So why then should Hunter businesses bother? Because we know how to adapt, innovate and lead.
Take a quick look back, it was this region that successfully shook off the shackles of an industrial steelmaking town late last century to become a vibrant region that according to Deloitte in 2013 provided $36.9 billion into the economy, making it Australia's largest regional economy.
At the street level the Hunter is an economy that encourages diversity of business and rewards those who can quickly adapt to changing market needs.
As a profession, insolvency specialist accountants are often viewed as one of the barometers of bad times in business - and to a certain extent that is true, but most recently we have also noted that we are a barometer for business turnarounds. Businesses that know that their new normal is about getting rid of what is not needed and the products or services that are not performing well. Businesses that know how to tidy their business while concentrating on providing products and skills that will meet demands of customers now and create new opportunities for their customers in the future will thrive.
Part of embracing the new normal is also about myth-busting and assessing risk differently. We must understand business processes and we should work with professionals that can help us navigate this new normal. We must invest in innovation, creativity and people, understand our marketplace and the factors that will affect our place in it.
The new normal understands that in the cyclical nature of business there are up and downs. The unemployment rate is just one of the economic indicators that ebb and flow throughout business cycles. Currently sitting at 6.55%, the Hunter Region’s unemployment rates is less than two percentage points higher than the 5.03% three-year average. These levels are not new to our region and are far from the worst we’ve seen. Businesses who can adapt in cyclical times will thrive.
No one really needs a crystal ball to see that the sustained period of low interest rates on the back of much flatter mining and manufacturing sectors will provide further challenges for this community. This is the new normal.