Welcome to Real Time Business, where we share insights on the challenges that companies are currently facing. According to one venture capitalist, the changes that COVID-19 created compressed 10 years of advancement to several months. In this interview, Americas EY Private Leader Lee Henderson discusses how entrepreneurs can stay competitive amid consumer inflation, and supply chain, human capital and other issues.
Del Irani: This is Real Time Business. Current market dynamics have created new levels of uncertainty across industries. This creates challenges for entrepreneurs who want to start or grow a business or gain access to capital. Today for insight, we're joined by Lee Henderson, Americas EY Private Leader. Lee, how are entrepreneurs adapting to the current market conditions?
Lee Henderson: They're planning for the unexpected. And, you know, unexpected used to mean that you lost a customer or there was a system outage for a couple of days. And now, unexpected means things like you've completely lost your company, data center has been compromised or part of the economy has been shut down.
So, we see entrepreneurs really reimagining everything about their business and making sure that their strategy really fits into something that is uncertain, which is a little bit different. Now, I've also spoken to a lot of entrepreneurs, and I see that they're focused primarily on three things. One is, how do we grow through M&A?
Two is, how do we really disrupt our operating model and transform our business? And three is, are we really investing in the right technologies? And are we also thinking about the right digital capabilities and data that will help us be more efficient and also enhance our customer experience? I was speaking to a venture capitalist, Kat Utecht, just a while back and she explained that the changes that COVID forced on the FinTech industry really produced about 10 years of advancement in several months.
So, what I've also seen is that entrepreneurs are now kind of scratching their heads and saying, how do we actually disrupt our own business? And what are some of the adjacent products and services that we can offer to really sort of battle this headwind?
Del Irani: So how are things like inflation and supply chain issues affecting entrepreneurs?
Lee Henderson: This supply chain challenge that we see and when you combine it with the consumer inflation that we're seeing at high levels right now, we haven't seen this in nearly 40 years. And, you look at high-growth entrepreneurs and you think about their buying power and how their buying power compares to those of their larger counterparts.
And you can see that a lot of times in supply-constrained environment, they get chucked to the back of the line. So, when they can't find products or services for their customers or they have to increase prices to deal with this issue that we're dealing with, with supply chain, it just puts them at a really uncompetitive position.
Now, when you take all that and you say on top of all of that, we have been dealing for the last couple of years with an unprecedented amount of human capital issues and you combine inflation with that, you can see that that's also constricted margins and is presenting a lot of risk for these small and mid-sized companies.
Del Irani: What are you advising your clients as they weather these disruptions and plan for long-term growth?
Lee Henderson: As odd as this sounds, don't worry about the recovery too much because we don't even know what the recovery looks like, and we don't know when it's coming. So, continue to do some of the basic things. Focus on your working capital, focus on financial flexibility, make sure that you have enough resources to be able to capitalize on opportunities that may come up.
We're also expressing to business leaders that it's important now more than ever to make sure that there is a constant dialogue with your employees to understand what those employees value. And while wages have always been really important, what we know now is that benefits, flexibility, culture are even more important now than they've ever been. And sometimes people value those even more important than the dollars.
And in all of this, though, I would say empathy is really key when you're thinking about human capital today.
Del Irani: Well, that's a lovely way to end this segment. Thanks, Lee. This is Real Time Business.