And before we even completed two months of this new decade, we have had predictions of a global recession – or at least that’s what some of the headlines are saying.

In The Independent, we were told: “Next global financial crisis will strike in 2020, warns investment bank JPMorgan – sparked by automated trading systems”.

The speculation is all due to the coronavirus and its global impact, shown by the effects it had on the markets last week. So why do we have the jitters? Simply put, supply chains can cope with some form of disruption for a few weeks but long term is another matter. In addition, China is pretty much on lockdown, with some activity attempting to resume.

The questions are:

Is there going to be a recession?

How do you prepare as a business?

What vulnerabilities have risen to the surface because of this outbreak?

In respect of the first question – we simply do not know.

It all depends on how well the virus is contained, our reactions to the virus and the confidence of investors in the market. Currently, there is a lack of confidence simply because of uncertainty. Yet this is not the only ingredient in play as to whether there is a recession or not. Given the UK is in discussions in respect of Brexit, we need to really review our international trade relationships more carefully.

The issue is that the UK was already on a cusp of a recession. As far back as August 2019 in The week in Perspective by Brewin Dolphin, they quoted: “It [Bank of England] now says there is a 30 per cent chance of a UK recession in the first quarter of 2020.”

So in terms of a recession there appears to be a number of matters thrown into this melting point and much like the floods, perhaps we need to start sandbagging and preparing for a possibility that a recession could be on the horizon. If we manage to avoid a recession, perhaps we still ought to start preparing for a drastic downturn in business due to issues with the supply chain.

So is there anything we can really do to prepare? Here’s some ideas:

- Cash remains Queen. If possible, start ensuring you are rebuilding the cash reserves.

- Carry out a stocktake. What do you have in terms of inventory and what do you absolutely need for the next six to 12 months? Become leaner in your orders. Have a look at home now and see what deals you can do with local suppliers. Try to fix the price and enter short-term arrangements/contracts.

- Focus on what you are really good at and sell that. It is easier to convert and deliver.

- Do not cut back on marketing and business development. This is always the hardest thing as the knee-jerk reaction is often to stop, but your current clients need to see you and the market needs to know you are still here.

Yet I still feel there is some silver lining in all of this and that is the exposure companies have had to their vulnerability and dependence upon China. Until now, CEOs and COOs have not allowed themselves to consciously acknowledge their over-reliance on the supply chain and product in terms of the percentage coming from China. Did we as a nation sleepwalk into this position?

The over-dependency was being identified as far back as 2015 by the Office of National Statistics when it stated: “China has become the UK’s second largest non-EU import partner behind America, accounting for 7 per cent of UK imports in 2014 compared with 3.3 per cent in 2004.”

I doubt that means we are about to abandon China altogether, but we will have to look at diversifying the supply chains. Perhaps this is a good time to look at how we as companies can bring some supply back home, particularly to the regions. We may not be in a pandemic but let’s prepare, review and reboot now; necessity has always been a great mother to most companies.

What every small business needs to do to prepare for coronavirus - Rashmi Dube