You left out some details.

Yes, Britian was not prepared for war in 1938. While the Royal Navy was the most powerful in the world, the British Army was still pretty small and the Royal Air Force was in transition from older biplane designs to the Hurricane and Spitfire monoplanes.

However, Germany wasn't fully prepared for war, either. Consider the case of one of their most potent weapons, the U-boat. They had planned on having a U-boat fleet of 300 submarines before starting the war. According to this source, when the war started in 1939:

The best boat for this type of warfare was the Type VII, medium size submarine. This type packed high offensive punch on a small displacement at the expense of crew comfort. The Type VII led the U-Boat offensive in the Atlantic during World War Two. Doenitz wanted a fleet of 300 U-Boats. When the war started he had only 55 and only 20 of these were capable of operations in the Atlantic. The Type VII was a single hull, medium displacement submarine with two parallel rudders, whose forward dive planes could not be folded flush with the hull.. Between 1939 to 1945 the Type VII provided the greatest numbers of U-Boats for the Kriegsmarine. With over 700 Type VII submarines being constructed, the type was the largest uniform group of submarines ever to have been built.

I don't know how many were available for operations in 1938, but it's safe to assume that there were far fewer than on September 1, 1939. Their

At the time when Chamberlain sold out Czechoslovakia, the Czechs had a sizeable and capable military, one of the best in Europe. They also had some good defensible borders with terrain that would've worked against the Panzer operations at the core of Blitzkrieg. All of that was thrown away by the Munich Agreement. While the British and French military wasn't at full strength in 1938, when combined with the Czechoslovakian military, they may well have been more capable than Britian and France alone in 1939.

From this source:

Chamberlain was a man who did not comprehend the circumstances in which he lived. The world was changing far more rapidly than he could handle. He knew that Britain did not possess the arms to fight a renewed German Wehrmacht. He sought to appease Hitler, and flew to Munich on September 29 to discuss the Czechoslovakian crisis. Also joining the discussion was Italian Duce Benito Mussolini and French Premier Édouard Daladier. Benes was not present, nor any Czech representative.

Chamberlain essentially sacrificed Czechoslovakia on the altar of appeasement. In exchange for the Sudatenland, Hitler promised to guarantee the new Czech borders. Eduard Benes immediately resigned, and Czechoslovakia would not be guaranteed. Parts of the country were broken off by Poland and Hungary, and on March 15, 1939, German troops entered Prague. Czechoslovakia ceased to exist.

A Czech and Slovak brigade was set up in Poland and fought the Germans the following September. Benes fled to London and set up a government in exile after the invasion of Poland.

The Czech Skoda munitions works made tanks for the Panzer legions, and the country was broken up into districts. The Czech monuments were taken down, streets and plazas renamed for prominent Nazis, and the singing of Czech songs forbidden. The Slovak region under Czech Nazi and Roman Catholic Priest Josef Tiso was second only to Germany in enacting anti-Semitic laws. Over 70,000 Slovak Jews died in concentration camps.