The economy isn’t always hunky dorky, periodic recessions are inevitable. When there’s a drop in spending the economy contracts and a recession ensues. Here in the UK we define a recession as the economy contracting for two consecutive quarters.
With recessions being inevitable, it’s imperative that businesses are able to survive them. With that in mind, here’s 10 tips for business survival through a recession.
Have a Plan
Strategic business plans are hugely important – all businesses should have one! Having a plan in general helps guide your business in the right direction, which is incredibly important in a recession.
Have a plan that utilises the business’s assets, plans the working capital cycle and maximises the businesses finances through uncertain times.
Cash is the number one reason businesses fail; it’s the blood that runs through the veins of every business, and without it the business can’t run. Therefore, closely managing your cash flow during uncertain economic times is key.
You need to make sure the cash in flows keep coming, and the out flows are managed closely to protect your business’s cash. Cash flow analysis, forecasting planning can help with this.
For more tips on cash flow, check out our Top 12 Cash Flow Management Tips.
Cut the Right Areas
Cutting costs and ‘tightening the belt’ is an inevitable course of business, not just in a recession. However, when tough economic times ensue this becomes an important part of a business’s survival.
The tricky part is to ensure you don’t cut so much out of the company that you’re unable to pivot when necessary to optimise opportunities that arise. Having a robust plan can help ensure the cuts made are necessary, and not crippling in the future.
Advertising and Marketing
It can be common that, in the face of uncertainty, one of the things a business cuts – or even slashes – is its advertising and marketing budget. This is a mistake! Consumers change their buying habits during a recession, they shop around more for other potential suppliers or comparable items. Your potential customers need to know you exist!
So, one of the areas you should spend time on is how to maximise your marketing – within your current means. You might not be able to ramp up the amount spent on marketing, but you can put a budget together that’s manageable and in line with your plan.
Capitalise on Your Current Customer Base
It’s not all about new customers; your existing, and loyal, customer base is already there – capitalise on them. There’s no additional cost of upselling to existing customers; you don’t have to spend money on advertising, therefore any upsell drops directly to your bottom line.
So, make your customers feel valued and important to your business – because they are! And sell more to them; cross sell, up sell and be the most useful supplier they have.
What you do solves a problem that your customers have – that’s how you make money. Well, during a recession problems change, expand, pivot and often multiply. Be innovative and revolutionary and keep up with all the problems that your customers are facing.
Can you offer more, offer something different, offer less – micro services rather than a full service might be a good opportunity during a recession. There are still opportunities in a recession – you just have to capitalise on them.
Don’t forget to give a great customer experience in all that you do; it’s much harder for a customer to move away from a company that makes them feel valued. They’ll be experiencing hard times too, an important part of keeping them engaged with you will be how you support them, help them and make them feel during tough times.
In that same way you should about your customers during uncertain times, you should also be thinking about your staff. They know that times are tough and are worried themselves. Keep them informed, let them know the business’s plans and where it’s going.
When they know the direction the business is going in they can work with you to get it there. Teamwork makes the dream work, and it helps with productivity and utilising your staff to their full potential.
Don’t Go It Alone
As well as looking internally to personnel, you should also look externally for support; you undoubtedly have a network of contacts and external services that you utilise in your business – during a recession is the time to utilise this support to help you drive in the right direction.
Seek out information and advice. You’ll have peers in business and networking groups that you can talk to; these people will probably be experiencing similar things to you – support each other. Speak to your bank, speak to your accountant, speak to your marketing support, speak to your IT and computer software support teams…you get my drift
No one of these items should be looked at in isolation; to survive a recession businesses need to factor in many moving parts of the greater whole. Do that. Don’t focus on one area over another. Just like in business during good economic times, all the parts are important.