The COVID-19 pandemic has re-calibrated our beliefs. We have learned that we can work from home with the aid of modern technologies thus improving our productivity by eliminating the daily commute. We have also learned to operate without reliance on ‘at hand’ secretarial support that we once thought was essential. These are positive outcomes emerging from what is otherwise a dire situation. However, we are yet to learn how to improve business profits, which will be crucial to secure a prosperous future for Australians. Phil Ruthven from IBISWorld recently published an article titled Economic & Employment Perspective: A Long View where he cited ‘of the 2.1 million businesses in Australia only 1 in 10 manage to generate profits equivalent to world’s best practice. This compares to 4 in 10 businesses in the United States’. Worse still, Phil highlights that the average return on shareholder funds is a mere 3.8%, which has not improved in 30 years and is less than the 10-year bond rate. This statistic must radically improve if Australia is to recover from the economic damage inflicted by the pandemic.

 

To rise out of the current recession and hopefully not a depression that the country potentially faces, private and government enterprises will need to do the heavy lifting in the years ahead to ensure Australians continue to improve their quality of life without leaving the legacy of unsustainable national, corporate and personal debt. Modern technologies together with intelligent decision-making by business leaders will be required to make the transition to improve profits. Letting go of old beliefs and embracing a new-world view of how organisations must invest more in automation, mobility, integration and data analytics will lead to improving the profitability of Australian businesses. That, of course, is if business leaders are prepared to take ‘A Long View’.     

 

If improving profitability is of interest to you, get in touch!

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Robert Wagner, Managing Partner, Harriss Wagner Consultants and Advisers