2008 feels like a lifetime ago…
Back then, my son Stuart – who is now a father – was just off to university, while Amy was still in secondary school.
I’d been living in the same house for 21 years – the same house I’ve just moved out of.
And my business was very different, too. Instead of focusing on helping growing businesses, a lot of our work concerned distressed businesses. I was also very heavily involved in every aspect of the business, while today I look after more strategic matters and deputise a lot of the day-to-day work to very capable lieutenants.
Frankly it all feels so far back, it’s actually hard to remember much before that….
So perhaps it’s no wonder that other business owners seem to suffer from pre-2008 amnesia, too.
You see, back then the business environment was very different to what we’ve become used to in recent years.
We were constantly thinking about inflation and interest rates, and worried about the implications of some of these issues – like the need to manage costs and labour. We even used to hedge exchange rates!
Everyone was very conscious of the conditions outside our business, because it impacted every aspect of our operations.
All that changed in the 2010s, when the financial environment went through a period of extraordinary stability. It felt like a golden era…
…And we all fell out of the habit of worrying about external financial conditions. When interest rates and inflation were rock bottom for years on end, it just stopped mattering to most businesses.
That’s a serious problem now, though – because even though the financial environment is highly volatile, most business owners are still carrying on as if it’s 2015. They’re not thinking in a serious way about how these external conditions affect their business, and they’re not seriously adjusting their behaviour.
Yes, it’s true that inflation is finally dropping a bit. But it’s not going back to where it was pre-pandemic, not for a very long time. And given how used we became to low inflation, even 3% or 4% can be a challenge that your business has to actively manage.
Consider what else is going on in the wider world that could impact your business. How are taxes changing? Could American-Chinese tensions impact international trading conditions? Is consumer spending power evolving? What vulnerabilities are there in the market, and in your industry specifically?
When you are very close to the coalface, it can be difficult to find the time to think about these broader issues. But it’s exactly what we used to do in the 1990s and early 2000s. And it’s exactly what needs to be done in this brave new world, to keep our businesses resilient and protect them from huge financial shocks.
But what if you still don’t have time to consider these issues? Or if you’d like help understanding how changes in inflation, interest rates, exchange rates and costs of labour impact your business? We can help.
When we take on a company’s financial management, understanding all the financial risks you face and helping you mitigate them is part of our remit. We’re also looking or the opportunities and how to exploit them to your benefit!
That’s because we’re not just doing your accounts like a ‘regular’ accountant, but thinking more deeply about how you can grow faster and become more profitable.
That necessitates looking beyond what’s happening within your business…
Understanding what’s going on in your industry, amongst your competitors and in the wider world…
And then working with you to grasp the implications for your business, and act on them.
If that’s the kind of world-class financial management you’re looking for, please get in touch today. hit ‘reply’ to this blog or call us on 01279 647 447, and let’s have a no-obligation chat about your company’s financial goals and challenges, and how we can help you move forward.
Warmly,
Garry
