Insights

Businesses can never predict the future, but they can build organisations that are capable of surviving and flourishing under uncertain conditions. Across the UK, we are currently all working within a highly unpredictable economic climate, but there is no need to take a pessimistic outlook. Rather than treading water and waiting to see what happens, perhaps it is far better to be busy spotting new opportunities and making a few tweaks to the way you manage the business instead.

As the Nobel prizewinner Richard Feynman once said, “It’s much more interesting to live not knowing, than to have answers that might be wrong… In order to make progress, one must leave the door to the unknown ajar.”

Whether you agree with Brexit or not, are a Trump supporter or opponent, or whether you are in favour of the forthcoming general election in June, these things are not going to change. Achieving sustained commercial success is based on having the ability to overcome the uncertainty these events have created and finding ways to become leaner, work smarter and be more efficient and adaptable. This article shares some useful tips on running a business effectively during uncertain times.

Spot opportunities that are not impacted by political conditions

There are some major disruptive trends occurring currently that have the ability to transform our lives as consumers. Internet of Things, threat of cyber-security, mobile commerce, the ageing population, attitudes to careers and working, our increased appetite for health and wellbeing and a growing interest in the shared economy and renting rather than buying goods are all valid examples. These are just some of the shifts taking place where business owners can potentially identify secure commercial opportunities and capitalise upon them.

Seek advice to minimise the impact of currency fluctuations

Whether you are trading in Europe or globally, the weakened pound will probably be hitting margins hard. This is not something that will necessarily change in the short or medium term and the effect needs to be mitigated. Seeking advice from currency experts to identify ways to hedge your foreign exchange bets could make all the difference to already tight profit margins.

Foster resilience within the workforce.

Dealing with constant change and uncertainty requires a great deal of resilience and innovation from your employees. It is essential to be hiring people with the right attitude towards uncertain environments and rewarding them appropriately to maximise continuity. If everything around you is changing, having the business continuity that comes with loyal employees and very strong human capital assets will be very important. Policies such as employee share schemes can be beneficial to help achieve this and ensure you are better able to plan for the longer term, without having to worry about increasing salaries disproportionately to retain the best people.

Shorten financial-planning cycles

Many companies have adapted their budgeting processes to become more flexible in the face of uncertainty and allow for a range of outcomes. For example, sales planning using a base case, an optimistic case, or a pessimistic case and having a rolling budget rather than fixing it for the year, to keep plans as current as possible. Alternatively some companies prefer to adopt a twice yearly budgeting and financial-planning cycle where budget “contracts” are made for a 6-month period, with contingency plans in place for the rest of the year from months 6 – 12 (or beyond). Given the amount of uncertainty ahead with Brexit and the Election, trying to fix financial plans too far in advance doesn’t make sense and will result in almost continuous re-budgeting.

Allow others to express their views and concerns

One of the biggest consequences of uncertainty is the impact it will have on your employees and the concerns they may have. Creating an environment where people have a chance to share their views and talk about their issues openly is very important, to minimise potential distractions and maintain focus. The following case study, about a company that was affected by workers being distracted during the recent US election campaign, provides a great example to illustrate how to navigate this problem.

Case study: How one small business managed the impact of uncertainty

In the run up to the US elections, the CEO at meQuilibrium, a digital coaching platform, saw how levels of worry were increasing among the company’s workforce. It was clear that people were distracted, talking about their concerns and worried about the financial implications. The office atmosphere was tense and people were not fully engaged with their day to day work because of what was going on in the macro world.

Rather than stop the discussions from taking place (which would have been very difficult to achieve anyway) the company decided to encourage people to talk openly, share their views and seek support for any concerns. They set an overall tone before and after the election that it was fine to discuss politics in the office, people could have their say and then get on with the job required of them afterwards. It cleared the air and made everyone feel more comfortable and less anxious. Where individuals had identified specific problems, the company was able to help them guard against perceived risks, again improving productivity. Apart from improving the working atmosphere and productivity, taking this position was also in keeping with the company’s values of transparency and flexibility. So in addition to keeping people’s minds on the job at hand, the strategy also paid off by strengthening the company culture.

If you want help with strategic planning advice then email partners@rjp.co.uk