We are all familiar with that phrase and if we apply it to world events, we can clearly see more bumps than smooth tarmac ahead. But with businesses, how do they cope with these bumps? Being a business advisor and an owner, the answer is simple, it is “foresight”.
None of us are able to predict the future, otherwise we would choose the correct lottery numbers this Saturday. But, what we can all do as business leaders, is look at factors which may affect the UK, such as the domestic economy, the workforce, inflation and factors further afield. Once you know what these factors are, we can all start to cater for them.
Global economic factors as simple as influenced by factors such as the Ukraine war and now the conflict in the Middle East and whether or not this will spill into the wider region, not forgetting that Russia and China are still looking to form a stronger alliance. These all affect global sentiment.
When looking at the UK itself, we are all well aware of the interest rates increase, but what we do not realise is that we now pay more as a country for interest payments than we do on defence. In the short term, none of this will change, as interest rates will take more time to rebalance, maybe that is why M&A transactions in terms of value are on the decline, as are IPOs, whilst corporate insolvencies are on the rise.
In the current uncertain climate, private equity may be more cautious and foreign investment may slow down, but we have to also look forward and consider that there is a good chance there may be a change of government in the new year with the election looming. This will bring with it new policy changes.
Therefore, the message to business owners is to focus on increasing productivity and continue to invest in R&D and purchases of equipment. Without these commitments, businesses may not be cushioned from the bumps in the road that will be faced in the next 12 months. It is like the old adage, do not fix the roof when it is raining, fix it when the sun is shining. Even though it may be raining now, there are clearly storms ahead.
