Last week, during a team meeting, we discussed the awful situation in the Ukraine.
Like everyone, our initial reaction was shock and horror at the humanitarian and political disaster. The pictures of tanks, bombings and refugees coming out of Ukraine are enraging and heart-breaking in equal measure. We simply cannot imagine what those poor people are going through.
But as an outsourced finance department, we also had to discuss the financial implications.
I told my team that it may not be clear right now how the war will affect us and our clients…
…But one thing’s for sure: There will be an impact.
Our job is to figure out what that may be, and prepare for it.
Less than 24 hours later, my phone rang. It was one of our clients’ bank managers.
When our client opened their account several years ago, they’d noted on a form that they did business in Russia.
They had 24 hours to put in writing that this was no longer the case – or their account would be closed. (Luckily they hadn’t worked with Russians for several years.)
Then we realised that one of our clients was having an app developed in the Ukraine. Another has extensive business dealings in Poland, and is worried about the knock-on effect.
How about you? Could the Ukraine situation affect your business?
Just like I told my team, you should be extremely careful before answering “no”. It is much safer to assume that the answer is “yes” and then figure out how.
You see, it’s virtually impossible to take an enormous country like Russia out of the world’s economic system without a very dramatic economic impact on the rest of us.
The examples I already gave you are obvious because they involve companies doing business in or near the war-torn region.
But even if you have nothing to do with Russia or the Ukraine, some of your suppliers or clients might. And if they’re affected, you will be too.
And even if your entire chain is Russia- and Ukraine-free, you’re still going to feel pressure.
Energy prices – already high – are going to shoot upwards. It seems likely that inflation and interest rates will also climb even faster than already projected.
The UK’s growth will inevitably suffer. We were relying on strong growth to help us recover from the pandemic, so if that doesn’t happen as expected, it’s very troubling.
You must make sure that your business can withstand whatever happens next.
If you haven’t done so already, start thinking about what you might do if your costs (or the cost of a specific part you buy) start doubling or tripling…
If one of your key suppliers or customers goes out of business…
Or you’re affected by a dramatic change in the value of the pound…
Or if your business savings are wiped out by inflation.
Each one of these events has the potential to cause you enormous difficulties – and perhaps even cause your business fatal harm.
While you can’t predict every scenario, you must map out the ones which hold the greatest risk for you. Even if events turn out differently, simply thinking now about the risks and how you’d manage them will give you a head-start.
I know I’ve talked about the importance of disaster-planning quite a lot recently and I’m beginning to feel a bit like a broken record…
But even in my worst nightmares, when I’ve talked before about the instability that lies ahead, I never imagined we’d be facing a war!
As we’ve learned with the pandemic, sometimes the worst really does come to pass. And it’s happening again now.
As a business owner, you simply cannot afford to wake up one morning in April or May facing outrageous costs or other difficulties, and have to figure out what to do under a tight deadline and emotional pressure.
You must plan now for the upcoming upheavals. It’s simply negligent not to.
If that’s something you’d like help with, hit ‘reply’ to this blog or call me today on 01279 647 447.
Let’s talk about how we can give your business maximum resilience – whatever the future holds.
Here’s to better times –
Garry
