6 Essential Recession Survival Tips for Small Business
Recession is one of those words that can instil fear through any business, but even more so in a small owner managed business. We as accountants can understand how difficult a recession can be for all. However, if a business can survive a recession they will emerge even stronger than before, as they will have developed some valuable survival skills which they can continue to implement, even when times are good. Someone has to survive the recession so why can’t it be you!
There are key factors that a business can employ to help them survive the recession, and they are not as difficult or as onerous as some managers might fear. Some of the key factors to survival are as follows:
# 1. A positive attitude
It may be a cliché but a positive attitude can get you through any situation. When your company is facing hard times it is important not to panic, as rash and often unproductive decisions can be made. If you portray a negative attitude this will only spread to your employees, along with others that deal with your business. It is important to note that you need to be realistic and acknowledge the issues your business is facing, but to be positive on how you are going to tackle those challenges.
# 2. Marketing
Marketing is critical in a recessionary time. Bill Gates once said “If I only had $2 to spend, I’d spend $1 on Marketing and PR”. You cannot put your head in the sand and wait for the recession to pass. You must market your business and make people aware that you are very much surviving this recession The cost of marketing will also decrease in a recession so it is the perfect time to take advantage of offers from advertisers.
There are many different ways to market your business in today’s modern world. Networking is an easy and effective marketing tool in a poor economy. You will be surprised by the number of leads and new customers you can obtain from attending trade shows, conferences, chamber of commerce events etc. Social Media is also a very effective marketing tool in our technological world. There may be an initial cost with this strategy however, if managed right, this can be a useful tool.
# 3. Review your business costs
You should determine all of the factors that are affecting your business, both internal and external, as this will enable you to devise a productive strategic plan. Some business owners make the mistake of cutting all costs which can be detrimental to their business. An owner manager needs to review all aspects of the business and identify those areas that a critical and therefore cannot be included in the cost cutting measures. If you are aware of the risks and opportunities of your business you can manage these in line with your long-term strategy to successfully navigate through a recession.
One good step is to re-negotiate the contracts with your suppliers and to agree the new prices for a longer period of time. This will be beneficial when the recession turns around as you will have the benefit of the favourable prices.
# 4. Customer Satisfaction
No matter what business you operate in, it is essential that you keep your customers happy. It is far more cost effective to retain existing customers than it is to obtain new ones. Whether you are selling goods or providing a service, how that product or service is delivered will determine the repeat business you can achieve, especially if the service you provide exceeds that of your competitors. You need to show the customer that they are better off with you than without you, thus making you a more valuable supplier.
# 5. Staff
Good staff are a vital asset to any business. Treating your staff right will ensure they will treat your customer’s right and as outlined above, customer satisfaction is key. If you are facing difficult times it is helpful to keep your staff informed and to get them on board with the measures you are taking to ensure the company’s survival. Talking to employees can sometimes uncover cost cutting measures that you may not have identified yourself.
It is also important to hold onto the talent within your organisation. However, during a recession many larger companies will make skilled staff redundant and this may be an opportunity for smaller businesses to gain staff members with skills and abilities that they would not normally be able to attract.
# 6. New opportunities
Small companies should always be on the lookout for new opportunities. New opportunities can present themselves in many different ways. For smaller businesses one significant opportunity arises when a large competitor exits the market. The small business owner should be ready to fill this gap and capitalise on it. The recession may also offer companies the chance to re-invent themselves. You can repackage your current offerings, offer upgrades to your service or product or expand your customer base.
Everyone is telling us we are living in a global market. If your current market is shrinking then perhaps you should look into expanding into the global market. The adoption of a social media marketing strategy mentioned above would be a key factor to your global expansion. Another opportunity available to smaller business is a possible merger. This may be a more difficult opportunity to take advantage of; however it may be worth the effort if the resulting outcome is business survival.
As we mentioned at the outset, as accountants, we do understand more than anyone how difficult a recession can be for all businesses; however you and your business can survive it and remember survival is the new profit!
If you would like any further advice on any of the above please do not hesitate to contact a member of our team.
Gail has over thirteen years experience within practice and joined the firm as partner in 2008.
Gail provides a personalised, value added audit and taxation service to the firm’s client base along with a proactive business partner approach in the key aspects of clients business to assist and advise in their development.