In my 40+ years as a commercial banker in New Jersey, there is an evergreen business opportunity that quickens my pulse and unleashes my inner optimist: the outlook for the new year. And 2024 is no different.
Sure, interest rates are at their highest since 2000. Global conflict is on the rise. Artificial intelligence feels like a bit of a wild card. None of that is within our control. However, as business leaders in New Jersey, we can dictate how we prepare to take advantage of new opportunities in the year ahead. And I have three simple axioms to help you do that. But first, let’s step back to hear what business leaders nationwide are thinking right now:
Recently, PwC released it Pulse Survey Results indicating that US business owners express more optimism about the economy than a year ago (recession concerns dropped by 18% since last October). However, leaders continue to reference concerns about rising costs, managing labor and resources, reducing risk, and improving efficiencies.
Certainly, these concerns merit attention, but from a banker’s perspective, 2024 could be the chance to develop a business plan that withstands economic headwinds.
Incorporating these three steps into your business plan can help better position your business for growth.
Too often, business owners bank on luck and pluck. They believe they can beat the market. That they can wait out the interest rate environment. Or that if they are strategic enough, it won’t apply to them. Unfortunately, these predilections, while understandable, are often fruitless, and always a distraction. With current macroeconomic, political, and social conditions, there are many distractions.
However, these factors are outside of individual control. It is important to avoid allowing them to distract you from your focus. By acknowledging the external impacts relevant to your business operations while focusing on product and practices, business owners can favorably position themselves by shifting their mindset to one of adaptability rather than one of playing defense.
Through focusing on the business at hand, providing quality products and services, improving the balance sheet, and increasing efficiency, business owners may be better positioned to address the needs of their companies rather than staying in a constant reactionary mode.
Growth, advancement, and progression are all results of action. And, after the pandemic-induced business hiatus, now is the time to take action.
While every business leader wants to maintain and execute her or his own plan/strategy, companies are better served when their management team is surrounded by trusted advisors.
Businesses should seek input from their accountants, bankers, attorneys, and other trusted advisors to ensure decisions are made with the greatest consideration. These advisors should also be able to help business owners identify yellow flags and their potential implications.
In recent years, low interest rates and excess liquidity have made it easy to ignore inefficiencies or balance sheet deviations. Businesses should consider taking decisive action to address any area that could be a risk to their capital, productivity, or efficiency. The cost of doing business has increased and an income statement should not be considered the only indicator of a company’s health.
As companies position themselves to weather economic volatility, it is important that they regularly stress test possible outcomes and scenarios to ensure the viability of their business. According to PwC nearly 50% of those surveyed cite the possibility of a reduced demand for goods or services as a top concern. Through regular stress testing businesses can address different scenarios in such a way that will allow for planning and action.
Inaction in today’s environment is potentially detrimental. Act now to make the most of your company’s potential.
For businesses heading into 2024, the opportunities to improve efficiencies and favorably position themselves will be considerable, especially through digitization, cash flow, and capital deployment to grow the business. Here are some immediate fiscal management considerations:
In Conclusion: Seize the Day
As 2024 approaches, business owners have the chance to not only conduct business, but to excel. During a time of economic uncertainty, this next year is certain to be pivotal for many businesses. That can feel daunting, but those who stay focused, proactive and analytical can stack the odds in their favor.
About the Author: Pete Dontas is the market executive for Wells Fargo Commercial Banking in New Jersey. He is responsible for leading four regional commercial banking teams throughout the state and focuses on serving customers and expanding business in the market.
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