Unprecedented Challenges in Business

In the current climate, particularly as we face Q4 of 2022, the reality for business owners and business leaders is that many organisations are ill-prepared to cope with the current market and economic challenges. The ability of most organisations  to address todays’ crises has been diminished by:

• the experiences and behaviours learned over the last decade, which was a period of upward trajectory;
• low-interest rates;
• moderate labour cost increases; and
• the disruptive impact of the pandemic on business focus and cohesion.

Many companies are at risk of being overwhelmed by the combination of external factors which continue to escalate. What is more, these factors will not show any signs of significant improvement over the the next 12 months. Such factors include, but are not limited to:

• Massive inflation in energy costs (59% YoY)
• Commodity and raw material cost inflation, coupled with volatile and constrained supply. e.g. Metals >30% YoY with >20% reduction in availability
• Increase in Logistics costs by >20%
• Direct Labour inflation costs 5-10%
• Indirect Labour cost increases due to increased regulatory provisions
• Talent churn and shortages
• The legitimate and unavoidable demands of Climate and Sustainability

The ability to pass costs “on” is today being increasingly constrained by

• the visible reduction in demand as end-users are now clearly being forced (or are choosing) to reduce spending on products and services.
• clients and customers increasingly pushing back on price increases as they in turn seek to “control the controllable”.

The necessity to act and to act now is critical as many businesses have been absorbing cost inflation at unsustainable levels for some time and are being squeezed from all sides.