The Canadian economy started the New Year with bleak economic news – dropping stock prices, low oil prices and a tanking Canadian dollar. The polite term for this circumstance is to say we are experiencing a dynamic market. Businesses operating in such a market need to assess their strategy and related financial planning with the reality of the market in mind.
In a more stable market, businesses view their strategy in terms of continuity, with the development of processes and internal controls that allow them to execute their business plan with controlled focus. In uncertain times, however, that focus may need to be challenged by senior management to ensure that opportunities and threats presented by the present day economic uncertainty are being considered. Think of it as remaining focused but with wide peripheral vision.
You will need to be able to stay focused but at the same time give some consideration to what the market change means to your business. You don't want to have a knee-jerk reaction to negative economic news, but you do need to acknowledge the risks, and the opportunities that arise when economic shifts occur.
The development of a strategy in any type of economy is underpinned by financial information. Do you know where your profit centres are? What are your specific financial risks? Are there initiatives you can undertake that may improve your gross margin, your sales revenue or your market share?
Your CPA can provide the information you need to make sound business decisions – and to help you adapt your strategy for today's market.