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Business Continuity: Because Bubbles Tend To Burst

Are you ready for the next shockwave?

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POSTED BY ROGER EDDOWES ON 24/09/2018 @ 8:00AM

It's been ten years since the shockwaves of what we now call 'the financial crisis' began to pulse through our economy. Can you believe that? Quite a decade, eh? But is your business continuity plan ready for the next shockwave?

If you don't have a business continuity plan, you're not ready for the next financial shockwave!

If you don't have a business continuity plan, you're not ready for the next financial shockwave!

copyright: ocusfocus / 123rf

When Lehmans Brothers collapsed on 15th September 2008, things had already been incredibly rocky for a year, with the US sub-prime mortgage market going into freefall.

Northern Rock had experienced its bank-run and been nationalised. But still nobody really realised just how long the waves would ripple for; for urgent action was being taken.

Within a month of Lehmans collapsing, Gordon Brown and Alistair Darling had pumped £37billion into RBS, HBOS and Lloyds TSB. Interest rates were being slashed and trillions of pounds were set to be injected into the economy via a strategy of quantitative easing.

"So, what about now?"

Well, it's said that banks are better placed to survive another such catastrophe (and here is not the place to debate how much they were masters of their own downfall in the first place). But back then, that disaster did send shockwaves indeed, and our problem is that they're still pulsating now.

Only last week, Gordon Brown spoke through the media to say he wasn't convinced the banking system is as robust as we'd like to think. As far as he's concerned, a lot of the financial safety net that had been put in place to help banks survive has been used up; the inevitability of another crash is written on the wall.

"What red flags are we seeing?"

Not wishing to be harbingers of doom, we confess that we do reckon there is a biggie on the horizon. Politicians are clearly warning that no deal for Brexit may well result in a housing market crash. Ten years ago we saw how much influence that had on the global economy. So, if prices were, to say, plummet by a third now ... well, you get the picture.

So, should we bury our heads in the sand? Or should we actually knuckle down and put some contingency plans in place? At Essendon, we'd argue that saying 'yes' to the latter and acting on it makes very sound business sense. So, what should you do? Are you ready for a shockwave?

Putting your business continuity hat on, Brexit isn't the only issue to be watching out for. So, think about it; what shockwaves might you be exposed to? How can you mitigate the impact?

In truth, we think about this a lot, and we decided it was worth sharing a few examples of what we've already put in place, because some may even apply to you:

  • Shockwave 1 - Cyberattack

    A genuine concern for both small and large businesses alike these days, cyberattack is definitely not something any business owner should overlook. At Essendon, we have invested heavily in our IT infrastructure in order to obtain our Cyber Essentials Certificate. Not only has doing this ensured our IT is robust, but it's also taught us a lot on the way too.

  • Shockwave 2 - Interest rate volatility

    Rising interest rates can cripple a business. Cash flow gets hit, profits are squeezed, and morale is decimated by insecurity. At Essendon, therefore, we manage borrowing extremely carefully and remain watchful all the time.

  • Shockwave 3 - Bank collapse

    As already demonstrated over the last decade, the collapse of a bank can have global ramifications. At Essendon, therefore, we've purposely built up financial reserves to manage cash flow through a crisis.

  • Shockwave 4 - Property market turmoil

    Havoc in the housing market ripples through the economy, including commercial property. At Essendon, in order to be mindful of how this could impact our business, we have secured long-term office facilities.

Don't ride the breeze on a bubble!

As a final word, with the fast-moving, but often temporary nature of our world today, we'd also strongly recommend that you avoid getting caught in a bubble. Bubbles are attractive. They glisten in the sunlight and float through the air seemingly weightless and trouble-free, but they're not. They burst ... it's in their nature.

So, when something new and shiny comes along, by all means investigate it further, but be wary of joining in on the rush to invest. Too many eager investors often push the price of something way above what it's actually worth. And when something does go pop, it can send out quite a shockwave. If you're only looking up when you hear the sonic boom ... it's too late.

"Would you like to know more?"

If you'd like to find out more about business continuity and how Essendon can help you create a plan ready for the next financial shockwave, do give me a call on 01908 774320 or click here to ping me an email and let's see how I can help you.

Until next time ...

ROGER EDDOWES
Business Godparent

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More about Roger Eddowes ...

Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.