What does success look like in the midst of COVID-19 issues and the impending Brexit cliff-edge?
Most would agree that financial success means achieving profits and minimising distribution of profits such that a business’ net worth continues to rise.
But does this definition hold good in today’s turbulent markets?
A minority of companies have achieved remarkable success by doing no more than being in the right place at the right time. Witness the success of online retailers and companies manufacturing and supplying personal protection products.
At the other end of the spectrum are businesses that have been forced to close. For example, much of the hospitality and entertainment sector. These businesses may have been in receipt of various grants and soft loans, but their bread and butter trading income may have dried up completely.
And in the middle are a wealth of firms that have seen their ability to trade at pre-coronavirus levels restricted but have managed to breakeven or make sustainable losses by digging into accumulated reserves.
Many advisors will have focused on support for those businesses in the middle sector helping to nurse companies as they strive to stay active. Advisers will also have commiserated with clients unable to trade.
However, we should not ignore those clients who have achieved remarkable results this year. For example, do we need to dust-off our over-trading notes? Are clients in this group paying attention to the management of working capital and credit control? Furthermore, profits produce tax liabilities. Are clients aware of these potential liabilities?
Economic indicators out today (12 August) confirm the UK is back in recession. As this is likely to be a global effect, it is after all a global pandemic, all businesses will need to be observant – keep an eye on their finances – and professional advisers will find themselves in demand.