In the early 1990’s, a recession was something you kept on going through to come into some sunlight the other side. However, the last eight or nine years have been very different.
We have all had to adjust to ongoing turmoil – pressures that may change but are unlikely to ease in the way they did before.
Increasingly, I find that SME owners focus less on national or even international politics and economics, and more on simply getting their heads down and triumphing over immediate business challenges as they arise.
Slower economic growth has been forecast by many for the UK this year, which means business owners have to have a total focus on, and belief in, their business to take the risky step of investing.
Many, however, are now faced with the choice of investing or getting out of the game, in an increasingly competitive marketplace.
If owners have to borrow money to make that investment, will there really only be a negligible rise in interest rates this year?
Certainly, lower inflation and steady interest rates would help business and consumer spending, the latter having defied predictions and continued in the face of Brexit.
Meanwhile, EU workers flee a Brexit-threatened Britain. The combination of low unemployment and the worst shrinking of living standards for decades, means that workforces negotiating for higher wages look to be holding a stronger hand than they have for several years.
While UK unemployment is forecast to rise over the next five years, that is not going to help firms faced with those negotiations in the short-term, in a country with massive skills shortages.
This could leave many firms with challenges squeezed on both sides, given the UK’s growth dropped behind all other G7 economies last year, and little change to that is forecast in 2018.
All this pressure on our businesses comes before I even mention our unstable government, or the possible pressures on the pound.
Yet, if wages go up, along with increased pension contributions and increased minimum wages, inevitably, companies facing challenges will have to increase prices and will experience rising inflation.
It’s not all doom and gloom
There has been good news for some. Few could have predicted the incredible rise of Bitcoin, and now other cryptocurrencies.
Launched back in 2009, it wasn’t until last year that cryptocurrencies really hit the headlines. According to CoinMarketCap.com, the total market value of the capitalisation of cryptocurrencies had topped $500bn dollars – a rise of over 3,000 per cent – in 2017.
Cryptocurrencies are becoming mainstream currency, and while we are not yet paying for our daily loaf with bitcoin, those days may not be far off.
Against all odds, the traditional stock market grew last year, both in Europe and in the US. This was despite investor worries surrounding Trump, Kim Jung Un, Brexit, the Middle East, Russia, China, Mexico and Boris Johnson.
The International Monetary Fund is optimistic that the global economy will do slightly better still in 2018, even allowing for UK’s stagnant efforts. Economists are taking a semi-optimistic view of the year ahead, albeit with some cautions of stability and a fair wind.
High street banks are shrinking faster and faster – unable to provide the ease of digital banking now demanded in the marketplace.
Indeed, pressure on all high street retailers is unrelenting. Theo Paphitis is quoted as saying “In all my years, I have never seen it so hard and unforgiving”.
Paphitis blames the government for pushing retail to the edge of the precipice, saying that their thinking lags well behind global development in areas of business legislation, policy and taxation, along with their continued disinterest in retail. I take his point, but then I don’t think it is much different in many other sectors.
Pressure mounts for finance professionals
With the impatience of the modern consumer, financial brokers may find their roles under pressure, as middle men are cut for speed and increased customer service.
Financial services are starting to suffer the disruption of the shared economy and digitisation. With more mobile banking, more cyber attacks will occur. Tech security is a booming industry to be in, with voice recognition ID being a particularly hot rock.
Internet of Things (IoT) hacks and attacks are on the increase too. Add in the sinister RATS (remote observation tools), IT security will be an area everyone in which every business owner will need to invest in future.
In addition, GDPR seems to be producing extremes of panic or disinterest, depending on who in business you talk to, and many believe workplaces are going to step up with heavier handed anti-harassment policies this year, as the wave of accusations continues.
2018 might not be the year that we all become out of work from automation, but our world is already starting to be transformed, and automation will impact on all our lives and jobs from now on. Unfortunately, the biggest reason I hear from businesses for automation is staffing issues.
Changing technology, AI, changes in the economy, and changes to our expectations of quality of life are all going to be big business challenges in the year ahead.
Jan Cavelle continues her examination of millennials by discussing why management styles must change as employee behaviour and demands continue to evolve.