BATTEN DOWN – THIS IS NOT THE TIME FOR HEROICS

Just how volatile that thing we call ‘sentiment’ can be, is illustrated by the business sector’s massive surge in confidence in the first quarter of this year. Jumping from 34 in the last quarter of last year, the RMB/BER Business Confidence Index made a blockbuster jump to 45 in the first three months of 2018.

John Matthews, President – Master Builders South Africa

And just as swiftly, it dropped back to 39 in this year’s second quarter.

The jump and its subsequent retreat were driven, as it turns out, by what a lot of people believe was just one factor – vain hope that a change in the country’s leadership was going to give the economy a quick boost.

Seriously, it’s not hard to be optimistic when it looks like that helicopter is coming to save you from the roof of your flooded house as the water rises, but when the darn thing crashes and burns, nobody’s going to blame you for being a bit downhearted. Specially if you feel that the pilot made an unforced error, scored an own goal, or missed the posts by a mile.

In a masterful understatement, BER analysts say the result of their research indicates that right now, close to three fifths of respondents regard prevailing business conditions as ‘unsatisfactory – a disappointing outcome, yet probably an accurate reflection of reality’.

But while despair is not advised (don’t forget, this has all happened before) it’s also not the time for extreme acts of heroism, like diving off the roof into the flood-waters and swimming against the current.

As those in the Cape have learned, when the notorious winter storms hit our shores, it’s best to batten down the hatches and weather the squall. Somehow.

Some of us suffer more than others, and the vulnerable are the most frequent victims.

But in the building industry, disaster doesn’t only strike the smaller players, and two recent national examples have graphically illustrated exactly that – as in the case of Basil Read and NMC.

It’s not really surprising that South African business is a bit bleak at this point, and the situation only bolsters evidence that perhaps positive sentiment based on an improved political climate is not the only factor to rely on for a better economic outlook.

So if there’s any answer, it could lie in not too easily responding with blind optimism, nor relying on the unknown. And particularly, not placing one’s confidence in the untested.

In an industry that’s as old as the Pyramids, we must have come to some useful conclusions over the aeons, that undoubtedly include the value of taking stock of a situation, considering the downside and planning for the recovery.

Perhaps it’s best to look to the past, and if you’ve been in business successfully for a good number of years, be advised by what brought you through the inevitable tough times before. Maybe you will find that size, or rather, right-sizing, does matter, and make the necessary adjustments.

You know what we’re talking about.

John

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