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Recession? Warning signs & safeguarding

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Britain has suffered eight recessions since 1945. Looking back over history, there’s a pattern of recessions occurring every four to seven years. The fact that we haven’t had a recession for over 11 years, and are currently experiencing a global pandemic means that many experts are predicting that the next recession is just around the corner. In fact, there was talk of a 2020 recession before coronavirus even took hold, what with the uncertainty surrounding Brexit, trade wars between the US and China and currency fluctuations.recession

The prospect of a recession is clearly a worry for many business owners – especially after a turbulent first half of the year already for many. And although there is also speculation of a sharp recovery once the country’s economy begins to reopen, it’s just as important for a business to prepare for a downturn as you would for growth.

So, what are the warning signs of a recession to look out for and what can you do now to prepare and safeguard your business as much as possible?

The warning signs

There are a few different barometers that experts and forecasters use when keeping an eye on the health of the economy. The stock market is often a good place to start. Look out for faster, more pronounced swings. For instance, the VIX index measures volatility in the S&P 500. By March 2020, the VIX had jumped 300% in three weeks; the highest level since the 2008 financial crisis. This certainly got experts speculating.

It might not be something you’ve considered before, but the price of copper also serves as a good barometer of the economy. When things are good, copper prices rise. When copper prices fall, you can assume the economy is going through a rough patch. Copper prices have been falling since 2018, a warning sign that a recession is perhaps not far off.

Rising unemployment is another sign. When unemployment rises 0.5% from its lows, a recession usually follows. This sign boasts a perfect 70-year track record so is a solid indicator. Obviously, the Covid-19 pandemic has had a huge impact on unemployment, which leads into the next warning sign.

You may have heard of the term ‘Black Swan’. A Black Swan is an unpredictable event that significantly impacts the economy. Of course, the current Black Swan is the coronavirus pandemic. The pandemic has caused a significant shock to the economy and due to unemployment, people’s personal finances are teetering on the edge.

How can businesses protect themselves?

Now is the time to begin safeguarding yourself against a testing financial time. Attracting new business and new customers at a difficult time is going to feel out of reach, but what you can do now is focus on your existing customer base. You’ll be thankful for brand loyalty and customer confidence so keep up communication and give them a reason to stay true to your brand.

Chances are this will be high on your priority list if you’ve felt the impacts of the pandemic, but give your business as much safety and security as possible. Could you take your services and offerings a little further and offer new and exciting opportunities or products to your customer base? Now is the time to grow, but be sure to be fully prepared for all possible outcomes of trying out a new strategy. Draw up solid contingency plans, don’t sacrifice your marketing budget and try to keep some money in the bank to fall back on.

You should also consider protecting any software you rely on for your day-to-day running and delivery in case the software host goes into administration as a result of the recession. Implementing SaaS Escrow into your business is an ideal way to protect your business against any possible financial fallout. AccessAssure independently monitors your software provider’s financial position, triggering a series of events should anomalies arise to protect and maintain your cloud-based software’s accessibility for at least three months of business continuity.

If you’ve prepared for the recession and set yourself up for success, the last thing you want is being impacted by a business you rely on shutting down. If this sounds like something that would help your business, LEAAS offer favourable terms or deferred payments on escrow provision, so you can get your ducks in order without any additional strain on your business.

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