When the sky falls
Should we be more worried about Dan Carter or credit rating downgrades? The answer is neither.
Wednesday, October 05 2011 || Comment || BY Julian Smith
The first time was the announcement that Standard & Poors had joined Fitch in cutting New Zealand’s credit rating from AA+ to a mere AA.
The second bombshell was the news that star All Black Dan Carter is out of the Rugby World Cup, accompanied by a photo that pictured more eloquently than many thousands of words how the country is currently feeling.
After a year punctuated by the country’s most expensive natural disaster, a skyrocketing dollar and months of sobering economic news from everywhere other than Asia – business owners could be forgiven for wondering where they have to look to get some encouragement.
So what should be more worrying - the prospect of more costly credit or the blow the country faces failing to fill the space at the top of the rugby trophy cabinet that’s been empty for more than two decades?
Certainly the double whammy from the ratings agencies seemed a pretty abrupt move to put the country on notice. And the fact that the level of personal indebtedness was the cause of the downgrade made it feel like a personal criticism.
But last time New Zealand was bundled out of the Rugby World Cup, we slipped into national mourning that seemed to drag on for months. Surely, for the average business owner, the accompanying squeeze on consumer confidence is not a happy prospect.
But as business people we should not spend any more time worrying about either. And we should also try to forget about the dark clouds on the horizon for the global economy. Why? Because anything we do in this regard will make not a single bit of difference to our rugby team, our major lenders, the economy or even our own businesses.
Sure, we can sensibly plan for any changes in our own markets. We can carefully consider our hiring intentions with regard to forecast demand. We can keep a close eye on our competitors. We can invest in innovation, research and development. We could contemplate diversification. We can review our investments. And most importantly, we can keep a very tight reign on our debtors to ensure our cashflow remains positive.
But we should be doing all of this anyway. And most good business owners think about these things daily.
The Rugby World Cup is a pleasant distraction (albeit now tinged with some anxiety). And the international economy is a less pleasant distraction. But they are just that: distractions. They can only put us off the things that really make a difference to our businesses. These are the areas we can exercise some control over, with positive outcomes which can only come by – and this is likely the answer to the ABs' crisis as well – focusing on getting the fundamentals right.
When we do that, we’re a team of world beaters, regardless of what the pundits say.
Julian Smith (@JulianTSmith) is the general manager for MYOB in New Zealand. A frequent keynote speaker and business commentator, he blogs on key issues and trends, providing advice on how to make business life easier.
