Tuesday 20 January 2026 4:01 pm | Updated: Tuesday 20 January 2026 4:03 pm
Business Health Check: The Five-Point Plan to Sharpen 2026 Performance
By: Kiran Russell, Head of Corporate Foreign Exchange Dealing - Investec
Financial analysis, accounting, statistics, investment, and sales performance from the past year, combined with current economic data and research, reveal crucial business convention insights. Companies flourish when operating with certainty, yet this essential element often proves elusive in today's volatile climate. This makes the present moment particularly opportune for conducting a thorough business health assessment, ensuring your organisation possesses the necessary tools to withstand whatever challenges the coming twelve months may present.
Preparing for Known and Unknown Challenges
Strategic planning for the year ahead necessitates becoming comfortable with varying degrees of uncertainty. Former US Defence Secretary Donald Rumsfeld's much-discussed framework of 'known knowns' and 'unknown unknowns', once widely mocked, has now entered common business lexicon. For corporate leaders, these concepts serve as a vital reminder: it is imperative to insulate enterprises not only from predictable events but also from those we can foresee as likely, and crucially, from completely unforeseen circumstances.
Several significant known factors are already shaping the outlook for 2026. Interest rates are on a downward trajectory; at Investec, we anticipate the Bank of England could lower them to as little as 3.25 per cent by year-end, contingent on inflation behaviour. Commodity prices, including oil, are generally declining, although precious metals like gold are experiencing substantial gains. Meanwhile, the US dollar, the world's dominant reserve currency for over six decades, is expected to weaken further following its poorest annual performance since 2017.
On the geopolitical stage, recent US intervention in Venezuela underscores the potential for further international instability. In such an environment, business leaders must adopt a proactive stance to avoid being caught unprepared. History shows that even previously successful enterprises can falter dramatically.
The Rising Tide of Business Distress
The past year has witnessed a sharp increase in small and medium-sized enterprises struggling to adapt to challenging financial conditions. According to the Business Distress Index compiled by insolvency specialists Real Business Rescue, 55,530 firms were in 'significant' or 'critical' financial distress during the third quarter of 2025. This represents a concerning 78 per cent rise compared to the previous twelve-month period.
Businesses across sectors have contended with a triple burden: higher taxes, escalating operational costs, and expensive borrowing. High-street retailers and consumer-facing industries such as hospitality and tourism have been particularly affected, yet even the most profitable companies remain acutely aware of these mounting pressures.
How to Set Your Business Up for Success in 2026
A comprehensive New Year health check focusing on treasury and risk management solutions can empower business leaders to ensure their organisations are properly prepared, rather than merely reacting to events as they unfold. Below are five critical elements to consider in your strategic review.
1. Do You Have Clear Visibility Over Your Cash Flow?
Inadequate cash flow management remains one of the most common reasons for business failure. Effective liquidity planning is essential before the new financial year commences, especially for the many firms whose fiscal year starts in April. A company might be aggressively pursuing growth yet exhaust its working capital; it may have invested heavily but failed to build sufficient reserves for emergencies, or it might lack proper oversight of daily global financial movements.
Even with robust sales and a healthy order book, if a business cannot accurately monitor its cash flow, growth can stall and failure may ensue. Your health check should rigorously examine whether you are optimising your financial structure to operate as efficiently and profitably as possible. For cash-rich businesses, this includes assessing whether surplus balances are working effectively—generating appropriate yields while maintaining necessary access and flexibility. Holding excess cash in low-yielding accounts represents a missed opportunity, particularly in a changing interest rate environment where liquidity and return need not be mutually exclusive.
2. Are You Effectively Managing Foreign Exchange Risk?
For any company conducting business overseas, currency rate fluctuations present a tangible risk. Both the US dollar and pound sterling have weakened against the euro over the past year, influenced by trade tariffs, interest rate differentials, and geopolitical uncertainty. Volatility could intensify significantly if global trade relations become more unpredictable.
Businesses must review their currency exposure proactively, rather than reacting only when major swings occur. This review should encompass everyday cross-border payment flows, ensuring international transactions are fully integrated into cash and liquidity planning. The imperative is to plan for volatility, not to hope for greater certainty.
3. Are You Prepared for Interest Rate Changes?
Companies should incorporate interest rate and funding considerations into their financial models as they plan for the year ahead. With UK interest rates forecast to decline, borrowing costs should become cheaper. Reduced expenses for new and existing business loans could free up cash flow for operational needs and growth initiatives.
Consider how this might affect your running costs and investment plans. Furthermore, assess how potential unknowns, such as further alterations to UK tax rules in the next Autumn Budget, could impact these strategic decisions.
4. How Resilient Is Your Business Performance if the Financial Environment Changes?
What would happen to your company in a best-case or worst-case economic scenario? How would you respond if the economy contracts unexpectedly, or expands more rapidly than anticipated? Stress-testing your assumptions against various economic scenarios enables you to plan for each situation, leaving your organisation better prepared for any outcome.
5. Does Your Governance Framework Need Tightening?
The New Year presents an ideal opportunity to re-examine your governance controls. Identify areas where improvements can be made, where additional controls are required, or where current financial reporting may be insufficient. Uncovering potential blind spots now can significantly enhance your business's resilience for the future.
Think Strategically Now, Save Resources Later
Since the global pandemic, companies have continuously adapted to rapidly changing business environments—from sharply fluctuating interest rates to recalibrated supply chains and shifting political priorities. The most resilient organisations were not necessarily those that anticipated change far in advance, but those that took deliberate steps to both protect and strengthen their operations for whatever challenges emerged.
A sharp focus on treasury and risk solutions can reinforce overall business strategy, helping organisations become more proactive and less reactive. This disciplined approach builds a foundation for sustained performance amid uncertainty.
Discover more at Investec Treasury Risk Solutions
Important information: The views expressed are those of the contributors at the time of publication and do not necessarily represent the views of the firm and should not be taken as advice or recommendations.
Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 172330. Registered in England and Wales No. 489604. Registered office at 30 Gresham Street, London EC2V 7QP. Member of the London Stock Exchange.
By Kiran Russell, Head of Corporate Foreign Exchange Dealing
Kiran leads the foreign exchange dealing desk at Investec, which provides tailored FX risk management solutions for corporate and institutional clients. The team, comprising FX strategists, structurers, and dealers, produces insightful market commentary and analysis to help clients make informed decisions.
