Predicting future events is not always easy in business.
Companies may have some indication as to how demand for goods and services will change over time, but external events can change things very quickly.
For instance, the credit crunch of 2008 saw consumers decide to save rather than spend, contributing to a lengthy recession.
A month or two before the collapse of Northern Rock, many businesses were enjoying excellent trading conditions and had no reason to believe turmoil was just around the corner.
Equally, economies can on occasion enjoy a rapid upturn, if manufacturing and services perform well and the value of exports exceeds the total value of imports.
When the situation changes – both in terms of the wider economy and the impact it has on individual companies – it is crucial that firms are flexible enough to respond.
The more agile they are, the better positioned such companies may be to either weather the storm or grow rapidly during a boom period.
Companies need to upscale or downscale their use of resources – and this means capital projects, paid employees and office premises.
Taking the latter as an example, some companies are still paying for large office areas which are only half full.
This is an inefficient and ultimately expensive way of working, since businesses are incurring additional overheads without fully utilising the resources they have available to them.
Renting a serviced office may be one way of getting around this problem. Firms can add extra space as and when they require it, extending their offices or making them smaller.
If they purchase an office building outright, or take out a long term lease, the firm may have less room to manoeuvre in terms of expanding or contracting.
And this may ultimately lead to increased costs, missed revenues and lower profit margins.
