Proven entrepreneur Feisal Nahaboo, founder and CEO of pioneering pharmacy group Alitam and creator of the revolutionary Overnight Multiple Merger Model’ (OMMM), warns that the UK is heading towards a crippling recession and that every business needs to be ready and protected when the hard times come.
In this exclusive article, Nahaboo provides his analysis of Britain’s precarious economic situation and offers seven crucial tips to help business owners weather the oncoming storm.
Trusted advisor to 500,000 Businesses
Being the visionary responsible for the creation of the world-class accountancy consolidation Xeinadin, comprising 122 accountancy firms and formed in a record-breaking 256 working days using his revolutionary OMMM M&A model, entrepreneur Feisal Nahaboo is highly trusted within the accountancy industry, and is well known for advising over 500 professional accountancy firms which, in turn, value his expert insights to advise over 500,000 UK-based companies and SMEs.
He correctly predicted the previous two recessions and the terrible impact they had on the UK economy, and was best abled to guide accountants and their clients in maximising their wealth during challenging economic periods.
How to prepare for a dedicated 2023 recession
Now, Nahaboo is predicting a third recession – a recession that is likely to hit households harder than what has come before, thanks to the ongoing impact of Brexit, the inflationary after-effects of the Covid pandemic and, now, the global destabilisation from Russia’s invasion of Ukraine.
Even before the invasion, the Bank of England was warning that households faced the biggest fall in living standards since modern records began as energy prices and interest rates soared.
As the deep recession of 2023 approaches, his message on how to best weather the oncoming economic storm is simple: prepare for it.
He explained: “Unfortunately, the economy is displaying all the hallmarks of an impending severe recession, which we classically define as two successive quarters of ‘negative growth’.
“For this to happen, the total amount of goods and services (GDP) produced by the UK would have to contract on a quarter by quarter basis for a total period of six months.
“Many of us are forecasting this. Major banks here and across the pond have downgraded their growth forecasts, and inflation is dangerously high.
“We are witnessing inflation of house prices, as well as high inflation of the price of basic goods and services; a trend already set in motion by Brexit and the subsequent supply chain issues.
“Because wages aren’t increasing in line with inflation, something has to give – and it’s usually the amount of household spending, which begins to reduce as people understandably tighten their belts.
“They become more conscious of their spending and budget carefully. As households discuss their economic pressures with their friends, family and neighbours, before you know it, there’s a widespread panic and further reduction in household spending.
“Businesses suffer with lower sales, so company directors begin to lay off staff to protect their companies, thereby increasing the number of people with little to spend.
As household spending falls further, businesses make even more staff redundant and the vicious cycle continues – and the economy worsens.
“It’s the panic of the economy and the news on TV announcing a looming recession that will speed up an inevitable recession.
“The attendant fall in manufacturing causes a severe shock to the economy. Right now, we have the exacerbating conditions of a sharp rise in energy prices plus the situation in Ukraine, which is having an impact on the price of many goods worldwide, most notably wheat.
“There is also the impact of sanctions imposed on Russia. A rise in fuel costs has an effect on almost every section of the economy (all businesses rely on transport to a greater or lesser degree), and the war in Ukraine continues to destabilise markets.
“There’s no doubt households and businesses are facing a uniquely challenging set of economic conditions.”
Act now – Feisal Nahaboo’s seven-point recession-shielding plan
Nahaboo is the latest in a string of experts to predict a third, more devastating UK recession, and enormous pressure on incomes, in 2023. Despite the ominous forecast, Nahaboo approaches the situation with his hallmark pragmatism.
He said: “As all of this hits the news, there’s a surge in ‘restricted spending behaviour’. It’s a cruel irony that it’s precisely this behaviour which tips us into recession. “And at that point it’s too late for businesses to prepare themselves. What I exhort all businesses to do is act now, prior to the pinch as it were.
“There are things you can do which will see you through – and maybe even help you profit more.”
Nahaboo has a 40-point checklist to bulletproof your business for recession, with his sound, strategic guidance providing effective measures to help shield every type of business as we enter difficult times.
Here, he provides seven key tips, with the promise that many more will be available via his LinkedIn account.
1. If you’re looking to launch a business now, be highly cautious. We are in the pre-recession, inflationary period, where people have cash to spend. Certain businesses, like those in luxury goods, will prosper. However, once the recession hits, they will be hit hard by the drop in disposable income and may struggle to survive.
2. This may seem counter-intuitive, but I urge you to invest now in your business, and go at full throttle, while the economy is still buoyant. Seek as many new contracts as you can, sign up prospects and secure them on longer-term contracts than may be the norm so they last longer than the recession. For existing clients and customers, upgrade their contracts to cover a longer duration, and possibly at a reduced price to encourage them to upgrade. This kind of growth programme won’t be as possible once recession hits. By acting now, you are shoring up your business for the coming economic turbulence and storm.
3. Invest carefully, leaving a sufficient cash surplus in your bank accounts. Consider spreading your investments across a number of different bank accounts and commodities. Invest in companies that may be ‘recession-proof’ like pharmacy and cheaper priced retailers.
4. Pay any outstanding bills now, and take the opportunity to renegotiate terms with third-party suppliers. Extend repayments over a longer period; for example, negotiate an extension of a 12-month contract to one of 36-48 months, again to ride the recession storm.
5. Review your P&L and, where costs are not strictly necessary, either eliminate them or reduce them accordingly. Often these costs are related to third parties, such as business consultants.
6. Further to this, make sure you are running a tight ship. Consider streamlining your staff and contractors if this is an option for you without impeding current sales. Consider using more contractors than employed to create more agility if you need to reduce labour costs during recession.
7. Increase the exit periods on customer contracts. for example, instead of offering a 12-month cancellation period, extend it to 18 or 24 months. Nahaboo added: “It’s also important to remember that, as entrepreneurs and dedicated business owners, we have to take the rough with the smooth. Our challenges are what make us stronger and lead to more resilient businesses overall.
“I always find it helpful to go back to my original vision for a company – maybe even pin it up on your wall – and use that to keep moving forward.
“I meet so many inspiring business leaders who have what I call ‘hard-won’ wisdom. You can’t put a price on that. Keep believing, and always reach out to your peers for support.”
The voice of business guidance
Nahaboo has made a career out of his unorthodox and unprecedented business thinking.
As founder of several ground-breaking businesses with his world-first Overnight Multiple Merger Model (OMMM), he is ideally placed to appraise the state of the UK economy, and offer his wisdom as to how to manage your business as recession looms.
For more than two decades, he has been driving up corporate standards in various industries, including the accountancy and pharmacy sectors. Many of Feisal’s views, opinions and guidance, therefore, have had a material impact on the UK economy itself.
Following the formation of accountancy giant Xeinadin in 2018, and which he led until December 2020, he launched his second OMMM, the 100-plus pharmacy store group Alitam, which he aims to build into a FTSE100 company within five years.
His business success, however, is a process which clearly hasn’t always been easy.
He said: “I built my first top 12 business in just 256 working days, something which had never been done before – or since.
“It took an enormous amount of determination and drive, especially when people told me it wasn’t possible.
“I’ve since gone on to build Alitam, which is changing the face of healthcare by placing pharmacies at the centre of a preventative health system. As CEO, I’m already preparing Alitam for next year’s recession to make it bulletproof.
“And I’m currently being feted by major private equity firms with investment planned to surpass £1bn to build other ground-breaking companies.
“These will be in industries less affected by recession – well-established industries built and prepared for the challenging times ahead of us.
Nahaboo added: “I’m hopeful my example inspires others to do something radical. We possess an enormous amount of talent in the UK.
“The emerging generation of entrepreneurs should be supported throughout the recession, so we can emerge with a really vibrant economy.”
To this end, Nahaboo has written a book detailing his business endeavours, designed to be a source of inspiration for all seasoned, and budding, entrepreneurs. Entitled “How to build a Top 12 business in 256 days”, it will be available to order in June 2022.