Navigating Volatility: How Businesses Can Handle Economic Uncertainty

Economic uncertainty is, perhaps ironically, one of the few certainties in business. The level to which economic uncertainty affects businesses, though, changes over time – and in recent years, has been more apparent than ever. Geopolitical tensions are at an unanticipated high, while barriers to trade continue to fuel disproportionate price rises nationally and internationally.

It is a business’ job to navigate these economic uncertainties with conviction and knowledge, to provide the best value to clients, employees and shareholders alike. But doing this is not a simple task. How can a business multilaterally tackle the various uncertainties that threaten its solidity?

Adapting to Market Changes

A solid baseline of control needs to be established before a business can claim to be resilient. Market fluctuations alone often spell the end of seemingly-robust businesses – fluctuations which are, in essence, baked in to our market system. Managing that unpredictability effectively means diversifying products and services, to protect against shifting customer demands and wider economic shifts. No business is safe if the entirety of their profits come from a singular source.

Financial Risk Management and Cost Control

It isn’t just the manner in which a business engages with the market that protects it from uncertainty, but also the way it manages its finances. Your business’ profits and holdings are unavoidably impacted by geopolitical shifts, trade barriers and fluctuations in stock and asset markets – as such, your approach to holding and investing your takings matters a great deal, both to the solidity of your future business and to your present-day cashflow capabilities.

Just as your business’ product offering should be diverse, so too should your business’ stock and asset holdings. This diversification should ensure liquid cash remains available, too, to mitigate the impacts of overinvestment at times of potentially poor cashflow. If you are engaged in international trade, or otherwise dealing with multiple currencies, then you have additional exposure to uncertainty via exchange rate fluctuations – exposure you can manage with careful forex hedging strategies, to minimise losses from volatile currency movements.

Strengthening Supply Chain Resilience

Every interaction you have as a business matters, and economic uncertainty ripples throughout those interactions – supply chain disruptions being a particularly common consequence of economic volatility. As a business, you should be prioritising the building of strong, adaptable supply chains; sourcing from multiple suppliers helps you hedge against negative impacts for individual contacts, while a diversification of approach to logistics minimises breakdowns in your chain.

Building Strong Relationships

In a wider sense, trust is key to creating some level of stability in times of economic uncertainty – beyond the specifics of your business’ supply chain. Everyone in your network is an important part of your business’ present and future stature, however tangentially they may be related; from financial advisors to industry contemporaries, working on strong relationships with those in your circle is key to ensuring that your company remains resilient and well-positioned for the future.