Why QLD Businesses should be “productively” paranoid

Michael Fingland

Executive Director and CEO

Why Qld businesses should be “productively” paranoid

As the RBA and Federal Government struggle to shift the challenging economic conditions, Queensland businesses must proactively prepare for things to get worse before they get better.

In my experience as a turnaround specialist, it’s not just tough times that cause insolvencies to rise, it’s the fact that too many businesses don’t have the necessary plans embedded into their operations and culture to survive when they are exposed to significant stress.

One concept that could help Queensland businesses prepare for unexpected challenges is productive paranoia, an idea introduced by leading business author Jim Collins.

Productive paranoia is essentially remaining constantly alert to the left-field threats that your business or industry could face at any given moment.

Be alert but not alarmed – use that paranoia to develop a proactive plan for what you would do if the worst-case scenario eventuated, be it a recession, a global pandemic or a major industry-wide disruption.

Vantage Performance has seen a spike in businesses wanting help with stress testing, a process where we look at how to protect the business against potential negative impacts by looking at how they would impact the business and how to drive forward a plan to counteract these negative impacts.

By having a plan in place for when the worst does happen, not only will you give your directors or financiers peace of mind, but your business will be in a position to respond, whatever the crisis, from Day 1.

This type of productive paranoia and subsequent stress testing is exactly what will help you take market share off your competitors as you will start implementing your turnaround strategy well before your competitors.

With business owners facing unrelenting market conditions, there are three steps you can take to stress test your business:

  1. Workshop the two or three assumptions that are most likely to happen if a major disruptive event occurred tomorrow – how would it impact your revenue, your customers, your cost base etc?
  2. Test those assumptions through your three-way forecast and assess how they will impact earnings, cash flow and your debt facilities (and if you don’t have a three-way forecast, this is your sign to establish one).
  3. Brainstorm initiatives your business could implement to combat these assumptions and include them in your 100 Day Plan and 300 Day Plan.

 

This text was a collaboration between Michael Fingland and The Courier Mail’s Queensland Business Weekly, published on May 22, 2024.

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