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The Most common Mistakes Made In A Recession

Written by: David Oliver

Article Overview: In this short incisive article discover two things that most firms get wrong and four easy ways to put it right..read on

The Most common Mistakes Made In A Recession

The Most Common Mistakes Made By Accountants In A Recession

It's incredible how times have changed - and how quickly! It's impossible to assess the full effect of the recession and even though recent FT research offers slim hope of positive change, others are predicting 'the worst is still to come'. The truth is no-one really knows, and the only certainty for us as accountants, is that the economic landscape has changed for ever, it will never be the same again. All this produces huge uncertainty, and in that uncertainty the most dangerous and most likely default is......... The introspection trap What is clear is that many firms are simply closing the shutters, reducing their cost base and digging in. Yet this introspective analysis of expenses can result in significant damage. Take a national firm we met with a few weeks ago. Each office had been instructed to cut costs and reduce unnecessary spend. In one office this resulted in the admin clerk being removed along with the tea lady! Sadly, when they left, somehow they took with them the joy of work and once high levels of motivation for that firm. Some of the partners wanted to leave and one of the senior partners told us - with pain in his face, "This has been one of the unhappiest months of my working life. What is worse is that this internal focus has resulted in us taking our eye off the ball externally. Our previous targets have all but been forgotten and the results are now being felt. Losing significant numbers of clients and going from strong growth to negative growth, has hugely dented our margins."

I understand for some firms - likely some reading this right now, cutting back may be a painful and necessary reality. Even then my appeal from the outset is; do what you may have to do, but still avoid the introspection trap. I saw it in through the lens of a metaphor. If you and I are out driving in a storm and we hit a large area of water impeding our progress on the road. We have two choices - maybe we could turn back and never reach our intended destination or we drive through and if we drive through there is one thing we must never do and that is to take our foot off the throttle. You can even keep one foot on the brake but if you take your foot off the throttle water in the vacuum created water gets sucked in and sooner or later the engine dies and we are stuck. Ladies and gentlemen it's not the time to get stuck it's time with intelligence to put our foot on the throttle. Cut costs intelligently where you can but still keep the foot on the throttle.

It was Admiral Lord Nelson who remarked Harbours rot good boats and good men. Ladies and gentlemen, now is not the time as individuals as firms or as branch offices to shrink back in the safe harbours of the introspection trap.

If we focus on cost cutting, staff reduction etc it can be bad or critical it affects

1. Motivation, staff, company, ethos, spirit of the organisation or practice
2. This will effect the service current customers get STAFF ONLY TREAT CUSTOMERS AS WELL AS THEY ARE TREATED
3. Your introspective view will mean you loose sight of the long term growth plans
4. It will mean that you bring about no growth or slow growth into reality

This was an extract taken from the Recent workshop 'Grow your firm during 2009'.

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Article Tags: accountants, admin clerk, cellpadding, economic landscape, full effect, internal focus, introspection, joy of work, levels of motivation, margins, outset, recession, senior partners, shutters, significant numbers, slim hope, table id, tea lady, uncertainty



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