Would you like to bankrupt your company?
When we examine Turkey's history from its establishment to the present day, it's natural to expect economic problems following the wars in the early years of the Republic and the eventual completion of the empire's existence. We can refer to these times more as years of scarcity rather than economic crises.
In this article, we will focus on the last 50 years, which represent the average age of today's Turkish society.
Unfortunately, whether due to internal or external factors, this period has been constantly marked by economic and political crises. This has not only held Turkey back but has also led us through periods where regardless of which government was in power, we witnessed more focus on extinguishing fires than addressing real issues.
A brief recap:
1970-1980: Oil crisis and high inflation
1980-1990: Political crises laid the groundwork for the '80 coup. The coup weakened the economy.
1990-2000: The '94 economic crisis, devaluation, high inflation, followed by the '99 earthquake.
2000-2010: Some of our banks were sold, some went bankrupt due to the banking sector crisis. Although the global crisis of 2008 didn't show its impact clearly, it affected our country.
2010-2020: Coup attempt, increasing number of refugees, rising unemployment, fluctuations in foreign currency, increasing inflation, and rising external debt led to economic crises.
2020-2030: The pandemic, earthquakes in Kahramanmaraş, global wars also affected the economy. And we haven't even finished this decade yet.
Just as a constantly sick person takes longer to recover from even minor illnesses due to the exhaustion of the body, our country has begun to take much longer to overcome negative situations than usual.
To illustrate, not just a country, but with a simpler example, a family is only as strong as its economic power. When your economy is not doing well, neither is your education, nutrition, nor health in today's world. When we consider that we face new risks every day, the poor state of the economy increases the level of damage family members would incur from these risks, weakening the family.
Now, let's get to the main point.
Are our companies prepared for these economic crises?
After every economic fluctuation, we hear:
"So many companies are facing bankruptcy, so many have closed down, companies are in dire straits."
I believe we've heard these sentences in various formats many times, and we've become so accustomed to them that we've started to accept them as true by generalizing, thinking, "If there's an economic crisis, companies go bankrupt, and that's natural."
As a Chartered Accountant affiliated with the Istanbul Chamber of Certified Public Accountants, unfortunately, I cannot easily accept this.
Every company that closes down is like a child this country has invested effort, allocated resources, and aimed to grow and develop. When a company closes, it's clear that much of these resources have gone to waste, and replacing them exhausts the economy.
Looking at the reasons companies close down:
Economic Factors
Inadequate Financial Management
Technological Changes
These reasons stand out.
Why can't companies overcome these problems?
Why are they facing the risk of bankruptcy and closure?
I believe that while not all, some companies have actually already gone bankrupt but are unaware of it. Unfortunately, in this country where it's very easy to establish a company, anyone with a bit of knowledge about the cost/income concept can enter the market without understanding price and economic strategies, market strategies, and technological strategies, simply copying existing ideas and businesses. They can engage in transactions with other firms and eventually harm that market, leading to closure.
These "ghost companies," taking full advantage of regulatory loopholes, have actually already closed down, but they are unaware. And when an economic crisis hits, they easily blame it on the economy.
We need to be prepared.
An understanding that we all need to urgently adopt as a necessity is that we must be ready for the risks of new political, economic crises, or wars that this country and the world we live in can bring at any moment.
Companies aim not only to survive but also to make profits, increase market share, and grow. Therefore, taking preventive measures starting from yesterday is crucial.
The company's financial structure should be reviewed against risky situations.
Price policies should be reviewed, and correct pricing should be established alongside product quality. Sometimes companies don't even know whether they're making a profit or not. They only sustain their lives with the cash flow between buying and selling. This leads to bankruptcy at the slightest economic fluctuation.
Budget methods should be implemented and discipline should be maintained. Most companies are progressing without goals and plans. We need to urgently change this and get used to working with targets so that we can develop methods to act in line with those goals.
A mentality of setting aside reserves should be developed and maintained continuously. Because during economic fluctuations, these reserves help protect us from risks. Our reserves help us consider the expenses incurred during that period. The classic method is that companies start thinking about it only when the risk becomes real. However, all the reasons for the risks actually come from the past.
Human capital quality should be increased, and performance criteria should be introduced.
Human capital should be continuously trained in line with technological developments.
Technological Transformation
Companies' jobs are much more difficult now. In addition to the above, as the homework brought to us by the last 50 years, we need to technologically transform our companies.
Not only economies but also technologies must be strong. Companies will also have to include technological developments in the risk factors and allocate budget for this.
We cannot do any of the above measures alone, just as we need either an accountant or a human resources department for some, we also cannot undergo technological changes alone. We need to find the right partner and review internal processes, digitize them, train our staff, change their visions so that they support rather than resist this journey.
Transformation of Sales Teams
Sales teams hold a significant place for companies in technological journeys. Because the data they provide, collecting information, and turning this information into big data "metadata" play an important role in designing companies' growth journeys. Every company may be technologically inadequate in converting this data into growth. Therefore, the period ahead will emerge as the period where technological partners shine and consultancy "coaching" processes are organized for companies.
When we anticipate that "inability to keep up with technological developments" will become the number one reason for companies' bankruptcies in the future, it is crucial not to repeat past economic mistakes in technology. Therefore, we urgently need to review company processes and implement the necessary measures.
In doing so, we should also be careful not to say, "we know everything and we see the risks and take the precautions ourselves," but rather to work with the right partners.
Let's also turn the spotlight on ourselves as we conclude.
As a member of the Istanbul Chamber of Certified Public Accountants and Chartered Accountants, we should also guide companies in their financial transformation. Unfortunately, in this process, we focused more on their tax processes than strengthening their financial structures. We contributed to the formation of the concept of minimizing taxes. In the future, we should change this and focus more on their financial structures rather than taxes, aiming to strengthen them to prolong the lifespans of our country's companies in the bigger picture.