Russell Bell: Coping with the high dollar

WHEN you create a strategic plan you have to take into account the forces external to your business to enable you to plot the correct course.
For many, ignorance is bliss and they prefer to operate using the maxims of the past and expect the old ways and things that made them successful in the past and hold true in the current environment.
Operating in this way is like climbing a mountain in a T-shirt and shorts without reading the weather report because yesterday it was perfect weather.
Those who are truly successful work hard to understand the external factors which affect their business and then shape their actions to operate effectively.
Of late, strategic planning has become more challenging in light of world and local events.
We have watched almost with bated breath as the United States teetered on a cliff made of trillions of dollars of debt.
This situation was amplified by party politics and brinksmanship which bordered on the moronic.
Not to mention, in Europe, several countries face sovereign debt crises.
These events seem so far away from Wanganui but their economic ripples reach us.
On the back of these things, the dollar has reached values which, even as recently as a year ago, I would have been laughed at had I suggested these levels.
The backbone of our local economy is a number of exporters, including the farming community, and each time the exchange rate moves up it means less money for them and, as a consequence, less money spent in local support businesses.
Yes, there is meant to be a positive side as a strong dollar should equate to a decrease in the cost of imports, although, like many I talk to, I have yet to see the price of the imports that I buy drop as significantly as the dollar has risen.
I have found that holding my breath for petrol below $2 is a health hazard.
What is truly scary about the world economy at the moment is the interconnected nature of financial markets where a negative event in a place miles away can affect economies all over the world.
Things can change so quickly you need to be watching developments regularly and use that understanding of potential consequences to make the right decisions.
So what you need to do is surround yourself with people who know what is going on and gain access to sources of information that are complete, accurate and valid.
While the US debt crisis unfolded last week, I consulted with people who trade in currencies, a former manager of one of the big four banks, former colleagues and friends in America and from that I was able to understand what was happening, the effect on my business and the effect on my clients.
These are uncertain times, but one thing is certain in the business world and that is change.
The more prepared you are, the better your understanding of your business' environment, the more likely it is that you will successfully negotiate the tough times.
Zenith Solutions is a Wanganui-based management consulting practice. It specialises in providing strategic planning, business process improvement and financial management services. Contact russell@zenith-solutions.co.nz or phone 021-244-2421.