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Posted by Mollie Porein - 23 May, 2019

How Business Owners Handle Market Uncertainty

As a business owner, you want to be sure that you can keep trading successfully at a price that keeps you working at a profit. However, with the changing economy, this can be a challenge to maintain throughout the financial year.

Not just are there versatile economies in major world powers such as the USA, UK and China, but there are other foreign trade links that can be held up due to various political reasons.

Here we are going to look at how you can handle market uncertainty within your business and why it is important to stay on top of the latest news stories and the markets that you may be entering.

Preparation Is Key

When facing the problem of market uncertainty, there can be a number of elements that can have an effect on the market as a whole that could affect your business, working capital, and the profits that you make. From the importance of regulation across every market to the volatility of new technologies and currencies, being prepared for the worst can be the difference between success and a rough patch.

With a number of foreign exchange brokers ready and waiting to help you decode this information, you can have all the information that you need about the latest drops in the market.

Although the use of a broker is always helpful, it is vital that you are prepared for any fluctuations that you may experience and adjust the price accordingly. This is particularly important when trading with or within the US, as the current political uncertainty and fluctuating taxes are all contributing to rise and fall in overall prices.

For this reason, preparing for potential volatility in pricing can help you adjust and capture the attention of consumers within markets, even when things are getting tough.

DSO average customer payemtn


Political And Economic Factors

Although there is a large amount of political uncertainty all around the globe, none has been more televised than that of the United States. With the current president discussing trade agreements with other influential powers such as Russia and China, this is having a large effect on the markets surrounding some of the highest selling commodities, as well as the overall value of the dollar.

Another contribution to the recent market uncertainty is the 35-day government shutdown that took place between December 22nd 2019 and the 25th of January 2019. Although the economy is on the rise in America, political uncertainty is what makes people very nervous to trade with them.

Although this government shutdown has not caused a huge amount of disruption to the economy, there are still several financial issues that span across a number of states, all of which are yet to be resolved. With the wages of the U.S workforce seeing an increase of 3.1% last year, this looks like a very promising sign for those families living from paycheck to paycheck.

However, this increase is not enough with the growth needing to be between 3.5-4% in order to make any significant change. This can have an effect on the market as a whole, as there still isn’t enough money being spent within businesses to trigger a healthier circulation.


Stay Ahead On Taxes

In addition to the above changes, there has also been a recent increase in taxes within the US. The federal reserve has increased the rate of taxes to fit the upward trend that they are witnessing in the economy. There has also been a recent development in the federal income tax breaks ahead of 2019’s financial year.

This has seen the prices adjusted based off of the inflation that the country is experiencing at the time. Although this may not seem like much of a change from that of 2018’s tax brackets, this can have a significant effect on the markets as a whole and how much both national and international trading can cost in the long run.

tax uncertaintySource

Political Uncertainty Globally

Another example of how political uncertainty can affect growing markets is Brexit. When the results of the referendum where announced, the value of the pound dropped by more than 10% to a 31-year low.

This was a huge change in the market and with the price of the pound still fluctuating due to the looming possibility of a ‘no deal’ Brexit, this could cause major political turmoil as well as sharp drops in the economy. Although this is looking like an unlikely occurrence, it is important to be ahead of the curve when looking at markets and how this can affect your business.

Although trading with the UK has not yet been majorly affected by the decision to leave the European Union there are still questions surrounding how the ports and other major trading posts up and down the UK will be affected in addition to how this will affect exports from the UK to other major European areas.

However, over 2 years on from the decision to leave, the pound has seen a series of increases and decreases as a result of the ongoing agreement since triggering the all-important Article 50.

As political uncertainty begins to be a common problem with many economies globally, it is always important to look at the ways that this can impact your ability to trade both nationally and internationally. Even the current value in currencies can be affected, all of which can have a profound effect on the amount of money that you are spending to operate your business.

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Topics: Finance, Management