Agility – it’s a word widely used when businesses talk of innovation and productivity improvements, but in my view, agility also means rapid decision making unhampered by bureaucracy, flexibility and increased employee and client engagement which all serve to deliver better outcomes. It is for this reason that I believe, agility will have a big part to play in helping UK businesses overcome the economic hurdles that they will encounter during 2023 if they are to ensure their future health.
I think many business owners were cautiously optimistic that 2022 was to be a year of recovery after two years of endurance throughout a global pandemic. However, Russia’s war with the Ukraine has driven up global energy prices and coupled with the economic and social aftermath of the pandemic, inflation has been pushed to record highs. As a result, soaring living costs, fears of a recession, volatility within supply chains, and a nation at nearly full employment resulting in a tight job market has all merged to extinguish confidence and many firms plans and expectations of growth.
As we enter 2023, would it be fair to say that the outlook seems any brighter for business owners? A bold statement I know when “forecasts” from a variety of experts vary; I’m not sure, but I’m remaining on the optimistic side!
If Andrew Bailey, Governor of the Bank of England is to be believed, he suggests the path for inflation may be easier than first expected with inflation rates falling rapidly this year as wholesale energy prices fall. However, despite these positive undertones, he believes the after effect of the Pandemic and the cost-of-living crisis will still push the UK into a recession. How deep and how long I’m not sure anybody knows but if we do fall into a recession, then the words “survive or thrive” spring to mind. Some sectors will be more impacted than others with consumers pointing to discretionary spend as they look to reduce outgoings. But some sectors will continue to thrive as is always the case.
What we do know is that the market will continue to be uncertain; trends and timings will change which will require businesses to respond quickly. Bailey is adamant that interest rates will continue to rise from their current 3.5% to a peak of 4.5% (a marked improvement on the 6% forecast last October amid the Liz Truss experiment) with the first move expected on 2 February – potentially another half-point rate rise but more likely to be a smaller quarter-point.
Although not as bad as predicted, rates are still rising and couple that with inflationary pressures a tight labour market and the scourge of low productivity, businesses will find themselves squeezed. Fortunately, businesses have proven that they are resilient and even if we do slip into a “long but shallow” recession, recent surveys suggest SMEs are confident that they will still be in business a year from now and crucially have plans to invest in their businesses to make the most of opportunities.
But how will firms ensure that the capitalise on this uncertain economy?
Building a level of agility into your business will ensure its success. Agility will enable firms to act faster when responding to opportunities. Whilst business owners are being realistic in expecting a recession, many are focussing their efforts on pushing their businesses forward through clever marketing and investing wisely in technology and recruiting the necessary talent required.
From a financial point of view, businesses should make certain that there financial partners are flexible when it comes to funding and can work responsively to ensure workable solutions are there to resolve the challenges that lay ahead.
Why will financial agility be important?
In 2023, business leaders will need to be even more focused on managing costs to support their businesses through the economic turbulence that seems set to remain.
For those using external finance, having clear and faster access to finance will allow them to push forward with much needed funding certainty to realise their future plans and business aspirations.
CEO eCapital Commercial Finance
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