Page 5 - The Alp McNamara Downturn Survival Kit

5
Searching for answers
It may seem counter intuitive to invest time in thinking about the future when every day is spent struggling with survival. But now is this time to develop a strategic view of the future and a plan for how you can adapt to capitalise on change.
6. Re-evaluate your new business world.
• Rightnow,wehavehistoricallylowinterestratesandtheRBAsays they will stay that way for a long while too. And the banks are still lending.
• Thoseinterestrateshaveaflowoneffecttoallotherformsof investment, including property. Property has other factors that can impact price, most notably rents and yields.
• Wehavemassiveunemployment,plusapotentialunderutilisationof resources in most industries and ... cheap fuel. Cheap inputs and resources are a phenomenon of recessions.
• Internationalbordersareeffectivelyclosed.Theycouldstaythatway for a long time. That will impact tourism, education and international business.
• ThispandemichasgivenrisetoasenseofNationalism.Willthe‘buy local’ movement gather ground or will the lure of cheap imported goods be too overwhelming in the long run. The answer impacts many strategic decisions.
• Whatwillfinanciersdowiththeirproblemloansastimegoesby? There is currently a moratorium on insolvencies & bankruptcies, yet there are still plenty of businesses closing their doors forever. How long can banks continue to support the marginal businesses?
• Earlyfailureswereprobablypredictablebutthosebusinesseswhich struggle on unprofitably for many months may eventually represent a strategic buying opportunity.
• Perhapshousingpricescouldfollowasimilarrealisationpathif protracted unemployment eventually leads to realisation of assets. Past predictions of falling prices during previous economic downturns have often not been realised. Historically low interest rates may see strong prices.