by Giles Cadman – Venulum Ltd
The continued gloom about the European economy and the Euro makes business tough. For any business owner there are ongoing doubts about factors well beyond their own control. The apparently unwillingness for European leaders to grasp the nettle and solve the crisis makes business owners unwilling to expand in case they cannot sustain the expansion in a downturn.
In the Telegraph Ambrose Evans-Pritchard covers a recent report from pro Euro economists.
Europe is “sleepwalking towards disaster”, according to the 17 experts, who warned that over the past few weeks “the situation in the debtor countries has deteriorated dramatically”.
“The sense of a neverending crisis, with one domino falling after another, must be reversed. The last domino, Spain, is days away from a liquidity crisis,” said the economists. They include two members of Germany’s Council of Economic Experts and leading euro specialists at the London of School of Economics, all euro supporters.
“This dramatic situation is the result of a eurozone system which, as currently constructed, is thoroughly broken. The cause is a systemic failure. It is the responsibility of all European nations that were parties to its flawed design, construction and implementation to contribute to a solution. Absent this collective response, the euro will disintegrate,” they added in a co-signed report for the Institute for New Economic Thinking.
Regardless of what happens in Europe and how badly the world markets get, businesses can set themselves up to survive. Controlling costs, and managing cashflow carefully are important starts for an anticipated poor market. Cash reserves rather than expansion for profit is the order of the day.
I’ve managed businesses through other downturns, but none as bad as this. The lessons learned about conserving cash apply now as they did then.