Back on the 5th of September of this year I wrote the mini-scenario below and diagrammed it. The sturm and drang that has ensued since then confirms the saying attributed to Harold Wilson that a week in politics is a long time. However, it hopefully shows how a simple scenario can be discussed and applied by your team in taking your business forward.
Survival scenarios and 2022
This set of scenarios draws on two dimensions of the current circumstances facing SME businesses in the UK. One can be viewed as a macro element, while the other – while important – is more of a microelement.
Against the background of the Russian occupation of Ukraine – and exacerbated in part by EU responses to it – small businesses are dealing with a variety of supply chain as well as food, raw materials, and energy supply cost and availability challenges. After several years of Covid-19 - which sapped many's vitality and cash resources - survival is a significant preoccupation.
The macro assumptions are seen as falling into two categories. In the first one, Russia doubles down and continues to try and subjugate Ukraine despite the uncertain outcome of the winter battles. In this view, food and energy supplies remain highly constrained and expensive in Europe and beyond. Also, the resolve of EU countries remains firm, and no country breaks ranks significantly on sanctions and energy supply bans. As a consequence, prices remain high, as does inflationary pressure.
In the second macro category, Russia dials back on its ambitions and attempts to hold areas it held before the incursion. It seeks to weaken EU and NATO resolve by making food products – its own and that it has seized – and energy available to countries within Europe. Domestic pressures build, and certain EU countries waver on sanctions in response to this. A consequence is that supplies increase, the transition from winter to summer reduces demand, and prices begin to fall.
An ongoing back-and-forth tug-of-war between Russia and Ukraine continues, national boundaries shift back and forth, supply of weaponry to Ukraine from the West declines but is counterbalanced by Russian efforts to satisfy its citizenry through switching from guns to butter. A stalemate drags on as long as Putin remains in command of Russian forces.
At the micro-level, two outcomes are addressed. In one case, the UK government makes significant cuts and savings in certain budget areas, and significant subsidies for energy costs are provided. This proves necessary for the new cabinet as it strives to hold off further opposition gains. SMEs secure welcome relief from energy costs which enables some of them to rebuild after the double blow of Covid-19 and higher prices.
The second outcome at the micro-level is one where a new Prime Minister and her cabinet make primarily symbolic gestures to support reduced energy costs considering the need to ensure the ongoing success of the NHS and the renewal of the Armed Forces. In this case, SME business sees little respite.
The above is briefly described/summarised in each quadrant of the matrix.
In conclusion - can we work with your team to develop a set of tailored scenarios and work with you to see if you should Pivot Now!?