Is now a good time for businesses to save or invest?
Saving vs investment is a big decision that many businesses come across at some point in their business journey. With the current Brexit situation, this dilemma can feel even more difficult to face. The media often portrays a scene of doom and gloom for small businesses. You should certainly consider what could happen, but also make sure you take it all with a pinch of salt. Nobody knows what the impact will be until the divorce process is complete and the dust begins to settle.
Whether a business should save or invest really depends on the type of business and the carefully-considered potential impact Brexit may have on the business.
For those who import, they may wish to build a small warchest to cover currency fluctuations over the next year or two, as it is widely predicted that Sterling may suffer against the Euro. On the flip side, exporters will be looking to capitalise on this and will be investing in infrastructure and building capacity, so that they can handle the increased demand!
So far, I’ve not really seen a marked difference in the funding markets, unlike the recession triggered by the “credit crunch”. From that perspective, savings aren’t required immediately – but if the economy takes a downturn, businesses will be glad to have some cash reserves to hand to help weather the storm.
There’s a wider shift happening, and that is the trend towards automation. Many businesses are looking to streamline their IT, moving to SAAS providers and reducing the reliance on local server based applications. Moving away from IT, the benefits of automation are being seen across all industries, from burger flipping machines to driverless vehicles. Whilst most businesses aren’t innovating and creating these automation machines, they can certainly benefit from investing in the technology that is available to them – particularly if they compete on price rather than product differentiation.