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How to place winning bets for your business in these uncertain times

Q: As the government warns of “significant economic uncertainty”, what can small businesses, like mine, do to ensure they are prepared for the unexpected? Indeed, can we really prepare when we do not know what will happen next?

A: After the Covid experience, we should have gotten used to the uncertainty and prepared for any future economic shocks, but I’m not sure that’s the case. The big lesson we’ve learned from Covid is that we can’t predict the future.

Over the past 25 years, any principal, school governor or charity trustee will have completed a risk analysis chart – assessing the likelihood and impact of every major issue.

But, unfortunately, analysis rarely reveals an unexpected disaster. Kudos to any organization that was so far ahead of the game they could predict Covid, the invasion of Ukraine, skyrocketing energy costs, and double-digit inflation.

This cautious approach to forward planning is natural territory for financial controllers, some of whom seize on major risks like manna from heaven and relish becoming the doomsayer.

While this analytical approach can be helpful, it almost certainly guarantees that you will adopt a risk aversion strategy similar to that of your competitors. The steady hand of caution can keep day-to-day affairs on track, but no one can anticipate events that fall into the “I never saw this coming” category.

Whoever you are and whatever your business, it’s good to have plenty of money in the bank, but you never know how much is enough.

In March 2020, our cash balance at Timpson was at an all-time high of £19 million. We thought we were bulletproof until Covid closed all our stores and we started losing £1.5m every week. Within days we were getting a £40m facility to ensure our long term survival.

Despite this experience, my first piece of advice is to watch the money, stay away from any temptation offered by attractive loans and avoid being at the mercy of lenders.

If things don’t go your way, you might suddenly become obsessed with alliances that originally seemed inconsequential.

Next, recognize the strengths and weaknesses of your current business. The best insurance against a harsh economic environment is to be really good at what you do.

Being the best in your field should mean that when the tokens are down, every competitor will fail before you. During the dotcom revolution, we heard a lot about “first mover advantage”. At the other end of the business cycle, more money is likely made by the last man standing who has a dominant share of a declining market.

So be able to say “if we can’t survive, I’m pretty sure no one else will”, but never take anything for granted, your business and the market it serves is always on the move.

Another tip: when facing economic uncertainty, always be aware of the changing world around you and keep your business up to date.

In the 1960s, when we were about to enter an economic roller coaster similar to what might be around the corner (with 20% more inflation and a horrible fuel crisis), we have fortunately recognized that our main concern was not economic uncertainty.

Our biggest threat was a long-term decline in demand for shoe repairs. Key cutting saved the day and is now the biggest part of our business. The changing demand from our customers was far more important than the unpredictable economy.

Here’s a happy thought – the dramatic events we face, in an uncertain future, will provide more opportunities than banana peels. As the roulette wheel of our economic future spins in the casino of commerce, business leaders who bet on the winning numbers will be the best entrepreneurs of the 2030s.

So, to sum up: watch the money like a hawk, during the torrid period ahead.

Try to ensure that the future of your business is determined by you and your management team. Don’t let institutional shareholders, creditors, or venture capitalists pull the plug because you don’t meet your commitments.

Second, stick to knitting – you make money by being good at what you do. Don’t endorse any cost-cutting plan that cuts people on the front lines without saving your overhead. Beware of any plan offered by your CFO that does not offer savings to the finance department.

Then keep yourself informed. Whatever happens to the economy, your customers’ tastes will continue to change. Be on the lookout for new opportunities that are sure to arise.

Finally, you’ll need a few lightbulb moments, lots of luck, and a flair to figure out how to make money from your good fortunes.


Sir John Timpson is chairman of high street service provider, Timpson.

Send him a question at [email protected] and read more answers from his Ask John column here