Belfast Telegraph

A positive attitude is your best asset during a recession

QUESTION: Credit is really tight, business risks are increasing, investment is stalling, inflation is rising, asset values are falling. What is a business leader to do?

ALAN BRANAGH, Northern Ireland chairman of the Academy For Chief Executives, replies:

Past recessions consistently show that many organisations carry on as they always did when bad times come until too late, in the vain hope that things may get better.

Eventually, they cut back non-discretionary costs, customer-service or product quality and, finally, charge unsustainably low prices in the hope of ‘buying' business in the short term, which is so often a lose-lose deal for all.

Surviving a recession needs no superficial platitudes.

There are no easy answers, but the following suggestions do stand the test of time.

Experience tells me that the biggest business killer, especially in a period when credit will be harder to get and much more expensive, is a lack of cash.

Profit is not as critical in a downturn as cash is.

A profitable business without cash — and no lines of credit — is a dead business.

There will be quite a few in the near

term, don't let your business be one of them.

If cash flow is vital, it seems sensible to do things that will raise cash or avoid it flowing out of the business. You can do a number of things. You can liquidate your assets by marking down stock in order to clear it and realise the value of it.

Reviewing company outgoings is also something that you can be doing now, ready for the day when you need cash to survive. You can also:

  • review and control expenses;
  • control your energy and telecommunications costs;
  • examine any other variable costs such as advertising, cleaning, buildings maintenance but only cut what is not necessary or is not revenue earning.

Flexibility is critical in difficult trading times, so watch for opportunities to use spare capacity or to take on another, complementary strand of business.

Remember that survival is the key and that death by cash strangulation is a real problem that must be avoided.

But, most of all, if you are the leader and guiding your business through these challenging times you will need a positive attitude and the belief that you can overcome it and come out stronger, leaner and fitter.

If you do, it is more likely that you will.

Your followers expect it of you and your tone will set the scene for them to follow and remain confident.

Positive attitude with positive action. It is what great leaders and great companies do.

The Academy for Chief Executives can be contacted at +44 (0) 7720 147099 or email: or

QUESTION: I own my own business and premises but am currently experiencing cash flow problems. I have paid my pension for years and heard that there are going to be changes to pensions, is there any way I can free up some cash from my pension to help my business?

CLAIRE GEDDIS, partner with S Hill & Co Investment Advisers, replies:

The Government has recently announced changes to self invested pension plans (SIPPs) which will allow savers greater freedom and control over their pensions than ever before.

From October, any pension funds built up from national insurance rebates from the State Second Pension can be transferred into a SIPP.

Many people were automatically contracted out of the State Second Pension when their personal pensions were set

up and have accumulated quite substantial funds over the years.

These funds are known as Protected Rights as the Government ring-fenced them from other pension funds and placed investment restrictions on them. Currently Protected Rights can only go into stakeholder pensions or personal pension plans which invest in insurance company funds.

However, this change in legislation will allow Protected rights funds to be transferred to SIPPs.

SIPPs offer much greater investment options and one of the most popular is commercial property. For a business owner like yourself, if you have a substantial Protected rights pension fund you can now transfer it and your other pension funds to a SIPP and use these funds to purchase your own business premises.

SIPPs are allowed to borrow up to 50% of their fund value to do this.

So if your total pension funds (including Protected Rights) are worth £200,000, you could borrow an additional £100,000.

A surveyor would value your business premises and assuming your pension fund and borrowings can cover the cost of this property, ownership can be transferred. The pension fund would transfer the purchase price to you, which you could use to improve your cash flow position.

Belfast Telegraph