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Recession offers no security; only opportunity.

4th, February 2009

We live in interesting times, from an economic perspective some will argue historic.

The truth is we always have.

In 1981 inflation was 27%. The UK government, headed by Margaret Thatcher under pressure from the IMF, (International Monetary Fund) raised the MLR (Minimum Lending Rate) to 17%. At the same time we were in conflict over the Falklands and there had just been the winter of discontent with many strikes. Unemployment rose to over 3m – and would not fall for 5 years. This was a serious Recession with manufacturing output falling by a third and many industries going bankrupt.

All the news headlines were of doom and gloom.

In that year I had no time to read the papers, or listen to the news, inadvertently cocooning myself from the pervasive panic that continuous exposure to bad news causes. It was the year I chose to start a new business. Perceived by my bankers as a high risk, I was forced to borrow at 4 points above MLR, a massive 21% interest rate. By today’s rates of almost 1% my bank could have been in the business of loan shark usury. Yet I had no comparison, I had only ever known high rates. The business plan I developed, however, allowed for whatever the cost of borrowing was. Good business principles that have been entirely forgotten in the last few years were simple and straightforward:

Borrow only to invest and expand from profits.
Always deliver better-than-excellent Service.

These worked infinitely better than today’s misguided business practices of: Buy as much as you can on credit, even if you don’t really need it; Look to borrow, never to save; Maximise your credit and borrow as much as you can. If there is a problem, blame the government, then ask for a bail out, but continue to blame the government.
Above all do not take personal responsibility, always seek to blame someone else.

In 1991, interest rates were only 10%. And the country experienced record level bankruptcies. In 2001, interest rates were halved again to 5%. The bubble that had seen all solid business principles forgotten in favour of get-rich-quick returns had burst, and the attention seeking Headlines screamed: UK slipping into recession.

Today in Recession clad 2009 the UK enjoys the lowest interest levels in history, about 1%. Without the question the best time for 350 years to start a business in the UK. Meanwhile, as they did in 1981, 1991 and 2001, the UK Headlines seek to blame, hound and crucify the perceived culprit – once again the elected Government. Blame must be found while no responsibility is accepted for spreading panic with every report vehemently defending the right to tell it how it is. Each one vying for the scoop of: UK is bankrupt – we told you so!

Blame will always look backward, while taking responsibility looks ahead for solutions. Recessions are Man-Made. And the UK’s £Trillion plus personal Credit Debt makes almost the whole populace culpable.

Recessions offer no security in life; yet historically they provide opportunity. Indeed there is never any security in life. A person can work their whole life with only three words between security and insecurity, between employment and unemployment: You’re fired or you’re redundant or I’m sorry. Companies don’t offer secure futures. They may well exist for generations yet will fail overnight when they do not follow either common sense or good business principles.

Whatever the future holds, will be a result of our choice. Not choosing is still making a choice – to do nothing. The only security is found in the belief in yourself whenever you meet a crisis that knocks you back. In Chinese the same symbols are used for both crisis and opportunity – the philosophy held that they are complimentary. The pearl of an opportunity can only derive from the grit of adversity. Ultimately it is about taking personal responsibility for whatever happens to you. In doing so you recognise the opportunity that comes to you because of the crisis.

Due to numerous requests on how we can recognize the right opportunity for us and maximize both the value and benefit it offers, I have this month made available a new e-book: to make a difference It is a no-nonsense straight-to-the-point guide on how you can do just that with your own life.