Written by Schon Condon in December, 2009

Just prior to the penning last article I was listening to one of the business radio programmes when the guest raised the issue of how well prepared were people for the forthcoming return to more affluent times which was then suddenly defined as the “Future Economic Boom” or, as we are prone to do these days, the FEB.

It was an interesting question because many business people when questioned about how the have been travelling and what they see as the future rectifier it will normally be a simple reference to the reversal of the current economic crisis.  If only it were that simple.  As I indicated last month the great surge of insolvency work has not yet really surfaced and could well actually be hidden in the FEB.

We have already seen two interest rate increases in October and November and there are many pundits that are actually very desirous of continuing increases because it will be reflective of a strong and growing economy.  But this beggars the question, are businesses truly prepared for the changing market.  Those businesses that have not been actively reducing debt, particularly those where there are limitations on their ability to pass on additional cost increases, will find that the downturn is actually hidden inside the upturn.

Realistic planning is now required based on the predicted worst case scenario because if you plan to survive the worst possible situation then you should be well placed if things don’t get that bad.

As interest rates increase with the aim to reduce inflation it will have an impact on spending habits.  Consequently it is quite possible that some businesses will be struck at both ends with both increasing costs (interest) as well as falling sales as consumers change their spending habits.

As always, it’s not the market that causes the failure, even though it is often that that is blamed, but rather it is ones failure to prepare for the change that ultimately brings about the grief and financial distress.  There is still time for review and rectification but don’t let the opportunity slip by.

On a different tangent but remaining with the topic at hand one thing that struck me with our new TLA (three letter acronym) was its relationship to the one it replaced i.e. the GFC.  Just as in the novel “2001: A Space Odyssey” where the computer at the centre of the story was named HAL, purportedly having derived by being one letter earlier in the alphabet than the then major computer organisation IBM.  Here we are as we approach 2010 with for all intents and purposes the same relationship, GFC leading to the FEB.  No doubt its possible to see symbolism in almost anything!!!

Finally, with this being our last “On The Beam” before the Festive Season may I take this opportunity to wish everyone all the best for Christmas and a Happy, Healthy and Safe New Year.

Enjoy the read.