If you run a business right now, you probably don’t need anyone to tell you how hard that is. Years of Covid disruption followed by economic and political chaos. Material costs have risen due to supply issues, inflation is hitting all overheads, in particular energy costs, and now interest rates are also rising fast. We can debate whether the ill considered mini budget caused this rise or merely accelerated it, but underlying borrowing costs have trebled or more for anyone not on a fixed rate.
So if you run a business it’s tough right now.
There are other impacts that many businesses don’t always consider.
If inflation and interest rates are worrying you, they may well be terrifying some of your employees. The majority of readers running their own businesses are old enough that they will probably have had bumps in the road before. Previous recessions, regulatory pressures in your industry, or just the cut and thrust of growth periods or contractions. Of course not all business owners are 50+ but many are. As a result they have two things in their favour. Firstly they have resilience. They have dealt with challenges before and have practical experience and emotional strength to handle the pressure that comes with any kind of turmoil. Secondly, they may have more confidence that this is a transitory period and that they will come out the other side.
Compare this with any adult under say 35. For them it has been a period of relatively plain sailing for most of their adult life. Cheap and easy debt to buy most things they wanted. Job security and flexibility with pretty much full employment, and until covid, nothing really to worry them. Yes house price inflation kept owning their own home just out of reach for many but on the whole it was a fairly comfortable time for young adults. Covid of course challenged all of us from a mental health and fear of mortality particularly for the elderly or infirm, but economically many were unaffected or even better off. All their wages, or 80% of their pay if furloughed, and less to spend it on.
Now think about that same age group. Many of your employees. They don’t have emotional or financial resilience. They don’t yet have the confidence that it will all sort itself out, eventually.
Surveys say most families are no more than a couple of paycheques away from homeless or starving because they have no savings, no bank of Mum & Dad to ‘borrow’ from.
Now think about a big chunk of your team having sleepless nights about not being able to feed their kids or pay the mortgage. (Let’s be clear though, we know that many business owners share these concerns, but they are to some degree able to make their own decisions and manage the situation. At the least the owner is the last one to become redundant).
So what can you do to help?
Few business can give pay rises sufficient to cover every employees higher costs without damaging their own finances. But some help costs very little.
- Understanding. You can make sure they know that you are not oblivious to their situation. Hold a meeting or send an email that says you care and will do everything you can to help. They may also feel very alone, and raising the topic of mortgage rate problems or cost of living crises gets them talking to each other. As the old adage goes… a problem shared is a problem halved.
- If you can, guide them to people who can support. That could be mortgage advisors or debt advisors, or more general support agencies like citizens advice or Samaritans. Each persons need will be different but don’t underestimate how valuable all of theses resources can be and how few people would think to use them.
- Encourage people to face up to any issues. If you can’t pay your energy bills, simply ignoring that fact won’t change anything. Energy providers have a legal obligation to help people in energy debt. Make sure people talk to their supplier early on. Similarly mortgage companies don’t send in the bailiffs when people can’t pay all their mortgage, they do that when people stop talking to them about options. They may be able to switch to interest only loans or even roll up some into the mortgage. What they can’t do is to find a solution when the customer isn’t communicating.
- Finally, be realistic with them. If their performance suffers as a result of the stress, a telling off at work isn’t going to help. We know that you may also need 110% effort to keep the business running at the moment, but you may need to ask that from those not in distress rather than those for whom it may be the final straw.
We do know from experience that things will get better. Economic cycles are just that. They will resolve in time. However, we also know that there will be casualties of a recession or interest rate spike, or energy crisis, and it isn’t always the rubbish ‘zombie’ businesses (already dead but don’t realise it yet) that fail.
So if your team need help and support then do what you can. If you need help and support, call us.