Staying safe financially – by Jon Bennion-Pedley

Globally, Covid19 is going to damage the world economy and cause recession in nearly every country on the planet. Sudhir Ruperelia gave his tips for staying safe financially which I have tweaked slightly and are below……

What will change during the slow down:

1. Spend on luxury will come down drastically

2. Long-term new projects such as construction, technology will be put on hold for the foreseeable future

3. Lifestyle expenditure such as higher rents, new cars and entertainment will be minimised

4. Working capital will be under tremendous pressure. Businesses will go bankrupt – especially those who are operating on borrowed working capital

5. Bad debt will increase so watch your credit control like a hawk

What will NOT change during the slow down:

1. People´s consumption on essentials will continue

2. There will be a rise in investment in technology solutions that will improve efficiency

3. Short-term trading businesses with healthy cash flow practices will thrive

4. There will be a rise in investment in spiritual/self-learning resources

5. Bargain products/services will be popular – if you buy well you will sell quickly

What you should do as an individual:

1. Hold back on any luxury/high risk investments where visibility of returns is difficult to predict or non-existent

2. Minimise expenditure on the routine stuff – analyse your lifestyle spend and ask the question, ”Is it really necessary?!” Try and cut fixed monthly expenditure by 20%

3. Develop yourself and learn new skills to become more sharper and efficient

4. Share the financial situation with your family members and educate them on the family financial position and plans to improve – don´t try and do it all by yourself

5. Invest in the right things. History repeats itself so take risks based on thorough research. This is definitely not the time to follow tips.

What you should do as an Entrepreneur:

1. Take care of your employees – communicate more than ever. They will remember your loyalty when the bad times are over

2. Use the slow down to improve your processes/people. Replace wage rises by a training investment in their development

3. Invest in technology/systems that will add value to your customers and build your brand

4. Be careful about capital investment, frugal on working capital decisions and mean on operating expenditure.

5. Pay your suppliers on time – they will help you if you help them

And lastly………..never surrender!!!! Stay safe, ask us about anything financial at any time, and trust God to bring us all out on the other side as wiser, better, kinder people.

Written by Jon Bennion-Pedley