No matter what your political views it seems clear that 2017 will pose some interesting challenges for businesses in general and smaller ones in particular. Whether it is fluctuating exchange rates, uncertainty about Brexit, the possible resurgence of a cold war, rising interest rates or a return to inflation there certainly seems more external elements likely to trouble a business in 2017 than in 2016. Whilst it is unlikely that all of these things will impact all businesses… indeed some of these things may not happen, however it seems foolhardy to believe that none of them will impact.
With the first full week of 2017 it is a good time to review how some of the possible changes on the horizon may impact business and think about ways of adjusting systems and procedures to deal with them.
Back in times where currencies and inflation fluctuations were greater many businesses put clauses in their bids concerning exchange rates and inflation – these are particularly important when making long term commitments. It was also not unusual for even small companies to “hedge” against such movements. These sort of considerations are to some extent the easy ones the more challenging ones are those that impact the way the company works.
One of the things that can happen in uncertain times is that clients seek to change how they do business:-
- they may ask for shorter or longer contracts changing the risk profile for your business.
- they may seek quotes from a wider range of suppliers.
- they may try to salami slice contracts – seeking quotes for ever smaller elements.
- seek extended credit terms.
Suppliers can also do similar things usually:-
- seeking shorter agreements so that they can review pricing more often.
- tighten credit terms.
- sneak in price escalators.
- even link pricing to delivery not order date.
It is worthwhile considering how to deal with these situations in advance.
In my next post I will look at how metrics and KPIs can be used to identify business changes early and react to them quickly.