You might not be in Greece, but it doesn’t mean you’re safe from the crisis. The Greek Crisis has sparked an outrage on the international scene, and that outrage has extended to regional and international markets too. Chances are your industry has been adversely affected by the Greek Crisis all over the world. The industry players, including you, are feeling the effects of it – no matter how big or small, they’re there. My name is Naomi Burgess and I’m going to tell you how exactly the Greek Crisis can hurt your business and what you can do to protect yourself.
You probably know that Greece was at some point, and likely still is, on the brink of exiting the Eurozone. That would mean that the country would no longer use Euros as the main currency and would probably start printing their own money. However, this decision is still in the air, and the markets don’t love that uncertainty. The businesses that operate in Europe are suffering the consequences of the markets’ reaction, and the profits are suffering. There’s no telling at present of where this uncertainty would lead and for how long it’s going to go on. You as a business owner therefore need to be prepared.
I understand that it would be quite tricky to afford the services of a foreign exchange expert for a small business, but I do recommend doing it. If it would stretch your budget beyond its capabilities, then you would have to invest in a proper risk management system to protect yourself. There are many organisations that organise conferences on risk management, although they’re quite pricey to attend. If you can find a way to find a risk management strategy that works for your company, I suggest that you implement it if you can afford it, or find a cheaper alternative.
Good Strategy in Crisis
A good risk management strategy would analyse what levels of risk the company is capable of taking and absorbing without incurring significant losses. It would depend on the company’s age, profitability, outreach and your short- and long-term plans for it. Therefore, there’s no such thing as a uniform risk management strategy that works for every single business, especially given the uncertainties I mentioned above. You’d be wise to plan for the worst possible outcome, whether you run a small or a large business. This doesn’t just apply to businesses within the UK – given the current tumultuous relationships between the Euro and other world currencies, the Greek crisis can vary and will have an adverse effect on businesses in most countries.
That’s not to say, though, that the Greek Crisis is all bad news. The low rate of the Euro means that the costs of the imports from the EU are lower, which you can take into account while planning your expenditures, including the money you’re going to spend on developing a risk management strategy. However, I advise that you treat this particular aspect of the Greek Crisis with caution, as it’s just as uncertain as everything else.
Action Plan on Crisis
I’d also suggest (this might actually be easy, given Britain’s current cold treatment of the Euro) that you limit your exposure to the European currency as much as you can. The Greek Crisis hasn’t affected the GBP as bad as the Euro so far, so you should consider conducting your business exclusively in the British currency for the time being. This might cause you to lose some European customers, however, if you’ve previously dealt with them using Euros, and if these losses would cause your profits to be substantially affected, you might want to continue as you were. This is one of those decisions that should be made on the basis of your risk management strategy. As a suggestion for those businesses that have clients in Europe, I’d like to offer that you add potential clients in the USA to your business plan – the dollar has also suffered the effects of the Crisis, but nowhere near as badly as the Euro. Conducting business in pounds and dollars could help you stay afloat until the Crisis is over.
However, you should know that no matter how good your risk management strategy might be, it cannot predict how far the Greek Crisis’ outreach is going to extend, and how much of an effect it’s going to have. The status of the Crisis is constantly changing, and it’s therefore very important to stay on top if you want your business to come out with minimal damage done to it. I’ve listed above what your risk management strategy should take into account, and I’d like to say that all those things are very important to consider, but there’s no guarantee that your strategy based on them would hold up against the aftermath of the Greek Crisis.