In 3 – No. 1 Should we be worried about ZERO GROWTH?

This is the first in our new series of “In 3” – where we take a very quick look at important news of the day which is likely to directly affect large numbers of businesses.

  1. What is happening?

In the final 3 months of 2019 the UK economy showed zero growth. This against a backdrop of overall growth for 2019 of 1.4% (and a comparative for 2018 of 1.3%).

For the 3rd quarter in a row the car industry really suffered with output actually down 1.1%. This was compensated for in large part by the service and construction sectors.

  1. Is it really a problem?

In short, yes … if it carries on. Nil or negative growth will mean that our trade deficit will widen (trade deficit being where exports minus imports is negative).

It is a problem for the country at a macro level; and it will likely become a problem for the smaller business down the track.

We understand that commentators are putting this lack of growth down to a combination of unwinding stocks piled up in advance of the original Brexit deadline of 31st October, coupled with the associated political uncertainty surrounding the whole Brexit process; at least and at last we have a clear direction of travel now which is giving a lot of us a little more comfort.

And to make you feel even better, it looks like things are picking up a bit in the first quarter of 2020. Something that we assume was taken into account when the Monetary Policy Committee at the Bank of England voted by 7 – 2 last month to hold interest rates at 0.75%.

  1. Is there anything I can do about?

Well, it really boils down to getting your business to be as resilient as possible. Managing your working capital; forecasting your cash flows as accurately as you possibly can and getting your pricing policy right.

To manage working capital properly you will need robust and accurate forecasts of activity – meaning not just a profit and loss account; but also a cashflow forecast and balance sheets which all link together. Tectona can quickly provide this for you by running you through our Quad² Review.

Having identified that you do need funding (and how much) we can help you review the funding options available to you.

Contact the Tectona team so that we can talk you through your options.

About Tectona

Tectona Partnership helps business owners sleep at night by embedding one of our 15 commercial finance directors in your management team. Very often, a part time solution is usually the most effective for small businesses. We make sure you have the necessary management information and strategic insight to make informed decisions and will tell you what you need to know, when you need to know it.

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