Wednesday, 10 September 2008

Recession coming - let's plan for it

I read a report somewhere the other day that I hoped was not true. It said that a well known and normally quite sane business organization in the UK was criticizing someone else for "talking us into a recession". My immediate reaction was simply that the remark undermined the credibility of the organization uttering such nonsense rather than besmirched the character of the person being criticized.

It did make me wonder though! I suppose when an economy has reached a point where it could go either way, then a few negative comments about trends might feed into a general feeling of uncertainty which just might create the right conditions to cause investors to retract, or to intensify the feeling of confidence in the minds of the public who reasonably might then retrench their own financial plans - but how likely is it that a negative comment will really create the right conditions for a recession in a national economy? In my opinion, it is extremely unlikely.

The EU has announced that in common with Germany and Spain, the UK is entering a recessionary phase in its economy. I believe that the seeds were sown many years ago; the reduction of this country's ability to manufacture, the reduction in its heavy industries and the diminution of other industries such as fisheries have all led to the point where the economy was less resilient to outside pressures. For any nation that has fully embraced a deregulated ideal in a global neo-liberal model economy it must be prepared for the cold winds that may come from unexpected quarters by ensuring that its domestic economy is robust and based upon solid capital production. In the UK the nation's economy has been increasingly reliant upon the financial markets - weren't we one of the premier markets of the World, up there with the US and Japan; weren't we a major node in the global capital networks? Well, yes, we were. The fault lines in the London markets became all to apparent this week when traders were unable to trade because of the extended 'down-time' of the vastly expensive technology that enables the global trading that is supposed to take place at London Stock Exchange. The consequence of this appalling flaw in their continuity planning? Loss of market share to other newer Bourses that exist because of the EU's policy to open up the markets; another jolt to the confidence within the UK. I wonder what the commentators in the business organizations will think of that one?

What, you may ask is all this doing in a blog that is written exclusively to promote SME retailers in the UK? Well it is a lesson to be learned, and learned fast. Just because you are a SME retailer does not make you any more likely to succeed or to fail simply because of the arrival of a recession. Indeed it is reasonable to argue that the very flexibility of a SME retailer actually lends itself to a greater expectation of survival than a much larger organization dependent upon impressing investors in the markets. What will affect your business is debt and a lack of planning. Some wise sage once said that the absence of any plan to succeed is by default a plan to fail. Just because you are a small business is not a reason not to plan and it is impossible to plan unless you have a full grasp of what your business is doing, how it is doing it and how it could be improved. Planning demands, as a stable mate, essential bench-marking and the ability to track the progress of the plan - it is really no different than planning a hike into the hills - you must know your destination, understand the capabilities of the participants and the equipment available to you and you must then plan a route accordingly. With a primary plan in place the wise expeditioner will ensure that escape routes and survival strategies are plentiful and cater for the hazards that you will have considered in your risk assessments along the way.

A small to medium sized enterprise is by definition a small to medium sized organization and s with any organization its state of development will determine its complexity. If yours is a relatively small and simple organization, take advantage of that fact by getting to understand every aspect of how your business functions and the systems and processes by which it earns its living actually work. The entrepreneur that does this will not simply survive a recession but will, in fact, be well placed to emerge as a strong player in their particular field of expertise and trade.

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