With so much happening now and so much information circulating, it’s difficult to gauge what is going on and how to deal with it all.
Something that is always important and straight forward to do to help understand the situation, is to pick up the phone and make contact with all your clients, suppliers, service providers and staff. They may not have all the answers, but you will get a clearer picture from them and they will be happy to share their thoughts – and they will appreciate you reaching out. This will help provide some valuable insight into your personal business requirements, but what about the bigger picture? What impact could this have?
A worst-case scenario
What could be the worst case in general terms? A long recession compounded by a no deal Brexit at the end of the year. Redundancies are mounting up as we see government support schemes such as furlough coming to an end in the next few months. Some industries will take the impact much harder than others. Airlines, service industries and entertainment will be badly affected and these all have knock on effects to other industries.
The last day to extend the Brexit deal was 30th June 2020 making the risk of a no deal crash out higher than before. If you export or deal in several national sectors, then this would need to be considered. All these people and services will still be around for the coming few months, but as things drag out the likelihood of resurrecting these industries will be so much harder. A long drawn out recession with major unemployment and little spending power in the economy would be hard for everyone.
What could be the best-case scenario?
The government secures a Brexit deal that is beneficial to the UK and with minimum disruption to business. We manage to open up new major trade deals with other economies and improve our import/export business.
The big long recession doesn’t happen, and we get a V-shaped recession where we bounce back quickly. The impact of the crisis so far has been quite severe. Britain’s economy suffered the largest quarterly fall in GDP since 1979 – shrinking by 2.2% according to the ONS’s latest figures just released. However the Bank of England’s chief economist, Andy Haldane said in a speech at the end of June, that the UK could be heading for a ‘V–shaped’ recovery as consumers, locked inside for weeks on end, rush to newly reopened shops nationwide.
He has predicted a return to near normal output by the end of 2020. Sales of cars, houses and general household goods indicate a greater than expected degree of underlying strength in consumer spending. If this was to further role out to the holiday and service industries, then it maybe a painful sharp hurt but temporary with a quick recovery. Companies will need enough cash flow and potential business coming in, to keep going a few months longer and will need to know how long they can sustain this. Signs of a pick-up may come quickly.
Plan ahead – How to prepare
There is no clear answer, but the strengths, weaknesses, opportunities and threats all need to be considered to enable you to plan ahead and make informed judgements going forward.