**Remembering Her Majesty Queen Elizabeth II and extending our condolences to the Royal Family – and indeed to the Commonwealth of nations — on her passing.**
Nearly three years ago, COVID started spreading, shutting down the world economy.
Governments sprung into action, spending billions to prop up failing businesses and to ensure their suddenly unemployed populations did not fall into penury. It was clear we were facing a once-in-a-lifetime financial disaster.
Today I’m not so sure…
There is every chance that the financial crisis we’re currently entering into will be worse for businesses.
Why?
First, because the factors driving this financial crisis aren’t just economic. They’re to do with Russia’s invasion of Ukraine driving up energy and food prices, destroying supply chains and feeding inflation; as well as other political tensions destabilising the world.
This makes it much more difficult for governments to solve. Sure, they can cut taxes or cap out-of-control energy prices. But this doesn’t solve the root problems, which will probably rumble on harmfully for years.
Second, we’re going through all this straight after the pandemic, which had already left our economy in tatters. Governments everywhere are in unprecedented levels of debt because of furlough and other COVID spending.
Not only has this made them very vulnerable, it’s left us with very little money to spend on rescuing the economy today. There will be no government help for failing businesses this time round… The money’s just not there.
And finally, in early 2020, many businesses acted decisively to save themselves, pivoting sharply and taking ruthless decisions. This was because it felt like we were facing a cliff edge. The crisis was immediate and unavoidable; Businesses had to act or die.
This crisis feels different. It’s creeping up on us slowly and like I said, it’s going to be long and drawn out. For many businesses the temptation will be to ignore it or leave decisive action to another day.
But remember the proverbial frog who doesn’t notice it’s being boiled alive because the water heats up slowly? Similarly, by the time these businesses realise that they’re in dire straits, it’ll be too late.
In short, all those arguing we’re facing a difficult winter are under-selling the problem. It’s very likely we’re facing a difficult few years, and that this protracted recession will make 2020 look mild.
For business owners, resilience is the name of the game. You must start preparing right now, so you are hardy enough to survive whatever’s coming next. Take this seriously and don’t delay.
In my next few emails, I’m going to outline some financial strategies to create a more sustainable business. Watch out for those.
And in the meanwhile, if you want to make sure you’re in the best possible financial situation going into the winter, please get in touch.
We can’t materialise money out of nowhere. But we can make sure your company finances are managed efficiently and smoothly…
Uncover any issues and help you deal with them in good time…
Help you see round the financial bend…
Make sure you know your numbers so you can take good financial decisions…
And be your financial partner and mentor, giving you the benefit of decades of experience managing the finances of companies just like yours. You do not have to deal with this financial crisis alone!
If that sounds like the kind of support you need, simply call us on 01279 647 447 or email to request a no-obligation chat. I’ll get right back to you.
Warmly,
Garry
