Surviving A Turbulent Financial Environment – Lending As A Gateway Part 2
In Surviving A Turbulent Financial Environment, we had previously broken down how one can survive a financially turbulent environment with an emphasis on lending as a gateway to prevailing. However this week we will be looking at the other 4 survival and recovery steps.
Attention needs to be paid to costs and in turn, a strategic approach is a necessary response. During turbulent times, people often resort to impulsive, top-down and arbitrary cost reduction that have unanticipated and perverse results. Sometimes these actions just shift costs rather than eliminate them altogether. The savings are deceptive. At its simplest, strategic cost management is about identifying specific areas within your lifestyle that diminish the economic value. The next step is to redeploy these resources or eliminate them from your life entirely.
Deal with debt
The primary reason inflation is bad for debt is that it triggers a rise in interest rates. With prices for almost every good and service rising, there’s less money left to cover debt payments. As an ever-greater portion of your budget consumes essentials like food, energy, and rent, tackling debt becomes increasingly difficult. If prices for basic living expenses exceed your income, you’ll have little choice but to borrow more money to make up the difference. As a result, you’ll take more time to repay your debt. Below are some tips for managing your debt as inflation rises:
- Prioritize paying down high-interest debt first.
- Cut back on discretionary spending.
- Cash in your savings to help pay for daily expenses
- Find a side hustle to earn extra income
Managing risk in uncertain times (Business-wise)
Now more than ever, people need to understand their current and potential risk exposures and give them a high strategic priority. As recent market events have highlighted, treating risk management as just another process is not tenable. Here are some things to do now, especially with your business;
- Don’t drop the risk ball; when times get tough, risk management too often falls off the agenda. This can be a vital mistake. Turbulent times require the evaluation of any dedicated risk management to consider if they need additional powers and resources.
- Review the changing conditions; with market conditions changing so rapidly, it is essential to review your business’s existing risk profile and consider how it can be adapted.
- Ensure an integrated approach; Risk management processes are strongest when they are linked to company strategy and embedded in the operations of the business, enabling insights and best practices to be shared.
Prepare for growth
Now is the time to take stock of prevailing conditions, exploit rare opportunities and maximize competitive advantage. The best opportunities often arise during downturns when distressed sellers are forced to offload valuable assets at bargain prices. As it is often said, companies make money when they buy, not when they sell, reflecting the importance of acquisition pricing.
Things to do now
- Scan for opportunities
- Consider new or emerging markets
- Keep a focus on innovation
- Consider new competitive advantages
- Keep to the strategy
Inflation is an unavoidable phase that affects almost all countries at some point and the best solution is to always be prepared. Tempting as it may be to fall back and put your goals on a halt due to the current financial situation, now is not the time. Be sure to stick to your growth strategy and approach with a well-thought-out plan. And when the need for that extra cash boost arises, you can count on us for quick no collateral loans of up to N2.5million.
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