Financial discipline implies buying the strictly necessary to encourage production, avoiding debt with credit lines and not succumbing to emotional purchases and distribute incomes in compliance with suppliers’ invoices.
The intelligence of knowing how to move the energy of money, manage resources and amalgamate a planned system of expenses is one of the recipes of the Swedish/German economies to turn times of crisis into moments of reinvention.
From the global economic crisis that affected European markets between 2011 and 2014, the recipe for Fiscal Discipline imposed by Angela Merkel became an astonishing proposal focused on reducing expenses to a minimum.
However, in Stockholm’s charming entrepreneurial environment, business mentors and counselors recommend increasing the production and focus in one product>market to elucidate how to withstand times of economic contraction, layoffs, loss of customers, or vast crises like Covid-19.
Precisely, defining an extraordinary situation -like Pandemia- implies an action protocol that differs from any normal position, even more since the main goal most keep focused on maintaining the business operative.
When market sales fall due to unexpected events, management must focus on strengthening financial discipline, reducing expenses, and calculating how the year’s business projections would be affected in the short and long term.
Financial discipline is about strategy based on a long-term vision
Creating the habit of solid financial discipline method will build a capable layer of safeguard to soothe the anxiety produced by low sales volumes or terrible turnover levels consequence of external crisis -or several market contraction.
Ibuka Masaru, the co-founder of Sony, commented among his relatives that extreme crises, such as survival of a post-atomic bomb economy, are the best scenarios to temper character, value every inch of the project and know how to move money to the places where there is the best chance of winning.
Cunning and quick thinking are valuable skills that will analyze market behavior in exceptional times -For example, Covid-19- in such a way, all the forces should point to create predictive models of risk on each possible scenario.
The predictions of less profitable scenarios in target markets where top products are sold require deep analysis of market niches, providers, distribution channels, stock management, strategic alliances and government restrictions in exportation or importation.
Also, acquire non-productive assets in the middle of a crisis using credit lines will accentuate indebtedness and compromise future incomes.
Therefore, anticipate that political decisions or disparities between the great powers can affect a market, sector or niche. It becomes the first emotional intelligence to know how to act during difficult periods as exceptional situations with a beginning, a maximum milestone and a withdrawal process.
Fiscal discipline represents the best strategy to withstand the most substantial economic crises, and at the same time, it marks the difference between people and organizations capable of maintaining leadership in their circle of influence.
This mental setup is one of the most admirable traits of the most successful people who saw an opportunity during recessions.
Finally, in each particular period within financial finances imply common sense to achieve a balance that establishes spending limits without reducing the family nucleus’s quality of life.