Now is the time to have a business survival strategy: recession is looming

I know many people don’t pay too much attention to general economic data, but because of the news sites I publish I’ve been covering economic indicators over the past three years.

Here’s the bottom line - the booming world economy has been financed by borrowing - a debt bubble that has been warned about continually for it’s direct impact on consumers and business.

The UK economy is no exception, with a property market that according to the OECD has been overvalued by as much as 65%.

While people have suggested a house price crash for at least 3 years, we’ve definitely hit the end of the property cycle - and the result is that over 1.5 million fixed-rate mortgage borrowers are about to have a rude awakening as the first wave of fixed term mortgages breaks and they find themselves hit with repayment increases of around 1%-1.5% of their mortgage value.

You think this just affects property?

Morgan Stanley yesterday issued a rare - and stark - shares alert: their model predicts the over the next 6 months the FTSE 100 will fall in value by 14%. That’s more than 1000 points will be wiped out from companies values, and would see the FTSE back in the 5600 range instead of the current 6600 range.

The last time Morgan Stanley offered such a warning was in 2002, before the dotcom bubble burst.

So, what’s the point of posting this on Brian’s business blog? Why is this of interest?

UK inflation is still running at 2.8%, above the 2.0% target, and further interest rates are largely expected in July. Which will compound all of the above issues.

That means we’re moving through an economic cycle from upturn to downturn.

And that means the serious possibility of economic recession affecting global markets.

Still not sure why this could be of importance to your business?

Recession means lower consumer spending, lower consumer spending means lower marketing budgets. Lower marketing budgets means marketers and their company get the heave-ho.

If I were a motivated person, I would make client retention, not acquisition, my top priority now. Show them how well you’ve done - show them the savings they make, the profits they earn, from the value of their services.

That way, if economic conditions do take a serious dive, you have demonstrated the essential value of your services, and the need to retain them under much tougher market conditions.

Now is the time to put together a survival strategy to ensure your business survival when conditions could be about to become much more challenging.