Economic Uncertainty

We've got a bit of chaos coming up. Property prices, interest rates, inflation, tightening cash flow. Everything just feels a bit wobbly right now. And you cap that off going into the Christmas break, kind of wondering how you're going to get through and what business is going to look like next year.

It's stressful and there's a few businesses we're working with who are kind of wondering how to keep the lights on. If we can find any good news in this, it’s that we've been through this before, and we've been through this, truth be told, not long ago.

We're walking into a Christmas period that's totally uncertain about what the economy looks like on the other side. Roll back two years and we were going into COVID wondering exactly the same thing. We were wondering what would lie on the other side. And we got through that period, by breaking down the decisions that were in front of us. By doing scenario planning and by not looking for the negative things that are all around us.

On your scenario planning, you look at it and you go what is it we know? What are the assumptions we need to make? And then what are the results flowing from those assumptions? As the months roll on next year, it's simply a question of checking the assumptions that you made back against what you're seeing in reality. Do this three or four different times, with different sets of assumptions and you come up with a series of different scenarios. You’re then able to critically evaluate those against what happens in reality, and that can help you find a way through.

If we move on to the decisions you've got to make, sometimes it's about delaying as many decisions as possible, or making them as small as we practically can. This isn't to say procrastinate and don't make decisions. It's to say, identify what the decision is you need to make, decide not to rush that call and then when you go to make the decision, hopefully you've got as much information as you can possibly get your hands on, so you make a more informed and better decision.

Finally, don't look for all the negative things that are out there. If you go out and buy brand new red car, then all you're going to see is red cars driving around you. If we read all of the newspaper headlines and buy into all of the negativity, then we're going to see that same negativity in our business. This isn't to say that you can positive your way to a great financial position. You just can't. But if we focus on what we're good at and build on those strengths and focus on the positive elements within our businesses, then we can avoid getting sucked into negative spirals.

So, to recap: first of all, do scenario planning, come up with assumptions and test those assumptions as the business environment evolves next year. Secondly, make small decisions as late as you can, because then we're making those decisions with more information. Thirdly look on the bright side. Find your strengths and play to those

P.S. if you want more information on getting your business through uncertain times check out level one of Convex Business School.