The voices of doom – Don’t panic, things may not be as bad for business as they sound.Posted: Aug 13, 2022

How bad are things for business?

You can’t help but notice that the economic news is pretty grim at the moment. I am writing this with some very gloomy headlines on my screen and whenever you turn on a TV or radio there seems to be someone predicting dire economic problems. So, OK, let’s be realistic from the start. The Economy isn’t good and that means we are heading into some problems. That doesn’t necessarily mean that everything is going to come crashing down though. It’s important to get a real perspective on what the situation is and maintain a sensible outlook. There are things you can do and even though it feels like an oncoming tsunami it may not be as big as it seems.

Every business is unique, and there is no magic formula to follow, but here are a few suggestions about how to look at the potential recession with a little bit of positivity.

• The news is not personal to you, but your focus should be

Remember when you are seeing all those warnings and predictions of the financial apocalypse, they are talking about a general situation. The news also often reports the worst-case scenarios because that makes good headlines. Yes, there is probably a recession coming and yes, we are looking at some tough times, but what is of primary important to you is how it will affect your finances and your business. Focus on your own business and what you need to do as a priority.

• You don’t need to wait for the hammer to fall

Let’s take a positive spin for a moment. The biggest advantage we have is that we know in advance that an economic downturn is coming. There is no surprise here so forewarned should be forearmed. You have time to look at your business and you also have time to be ready for a range of scenarios.

• Working together could be the key

You and your suppliers are all going through the same situation and, if you are a B2B company, so are your customers. Is now a good time to talk to them? Perhaps to have an open and honest dialogue about what potential problems you can deal with together? It may be that you can mutually re-assess your terms and conditions for example or perhaps work together in other ways to ease the impact of any economic downturn.

• Recessions don’t automatically mean financial ruin

There are plenty of companies that have survived recessions in the past. Do your planning and you will limit any potential damage from a shrinking or unstable economy. When you think back over your business life, I am willing to bet that you can think of plenty of other difficulties you overcame, maybe this is just one more.

• Know your numbers and let them guide you

If you read our blogs regularly you probably guessed that I am about to tell you that ‘cash is king’. It is and you need to know what you have and where it is, or you can’t assess what to do about a downturn. It’s more important than ever right now to know what you have coming in, what is going to go out, and when both of those things will be happening.

• Don’t panic if things look bad

If things do look bad, the last thing you should do is give in to panic. There is a great saying about ‘the closer you get to a calm mind, the stronger you become’. It is never a good idea to give in to worry or make knee jerk reactions. Things are rarely as bad as they seem and even if they are, having seen recessions and helped a lot of businesses through financial problems, I am 100% certain that what everyone needs most is a resolution. I can’t promise that resolution will be the one you would prefer, but the important thing is for us to find it so you can get on with things.

What if the situation does mean you need to look at insolvency?

While I appreciate this is much easier to say than to do, you need to be pragmatic and just accept it if things are not going to go well. Again, experience says that if we sit down and look at what options we have, there will be a solution of some sort, even if that does mean looking at insolvency. For the moment though, there is plenty of advice in our help for directors area including a section dedicated to recognising the signs you may be insolvent. If you are worried, I suggest you grab a cup of tea and take a look. Perhaps download our guide to insolvency for future reference as well. There are links to an appointment calendar on the site so you can arrange a free consultation if you think you have a financial problem. There is even a big red help button to press if you need help quickly.

If the recession does come it doesn’t necessarily mean the end. With a little planning, some strategy and knowing your numbers you will be in a much better position to avoid financial distress. If you can’t then we are here to help.