Survival methods to help your business through recession
Alternative ways to keep going in a recession
Cutting back on business spending is the classic response to economic downturn, but in the long term that may do your business more harm than good.
“There is ample evidence that the businesses that recover best after recession are the ones that keep a reasonable level of marketing spend going,” argues Richard Dodd at the CBI. “The most dangerous time for small businesses can be when the upturn comes. If you cut back too far or too hard, you could find that when the upturn comes you will be overstretched and run into cashflow problems.” So although it makes sense to get your business in order, cutting back to the basics could be disastrous. There are alternatives, though, which could help your business emerge stronger and more profitable when better times arrive. Paring the business back to your core business, or the most profitable part, is one solution.
Another is to diversify: “Depending on your business, there is no reason why you should not be looking at other markets and at export markets too, where they may already have gone through the recession and be coming out of it,” says Business Link adviser Barry Franklin. If you have intellectual rights protected by patent, consider licensing them out.
At Lloyds TSB, David Singleton is forthright: “”Keep an eye on competitors – try to find out what measures they have taken to deal with unforeseen changes in the marketplace.” Remember that the economic climate will affect your rivals in just the same way as it does your business. But if you take action now you can get your business into better shape for good and bad times to come.”
This is a good time for using all the help that is available for small businesses, such as the free energy audit offered by Business Link. Business Link spokeswoman Julie McGuckian has a simple response to rumours of recession: “Our best advice to any business is to go down to your local Business Link for help with all types of problems, whether you need a solicitor or an insolvency practitioner, and our advisers can take a more thorough look at your business.”
For although the newspapers are filled with dire warnings of a global downturn in the world economy which could lead to deep recession, there are plenty of signs too that businesses are thriving and that many will come through a downturn leaner, fitter and stronger. Bring your business into tiptop condition now, and it will thrive through lean times and the fatter times to follow.
As it launches its new business banking service for small business customers, Lloyds TSB voices its confidence in the economy: Trevor Williams, head of group economic research, points out, “The UK economy is not experiencing recession because consumer spending is more than offsetting the contraction in the manufacturing sector. If this continues, we expect growth of around two per cent in the UK this year.”
Lloyds TSB’s David Singleton is equally upbeat: “Remain positive and remember that your business has an opportunity to emerge from a difficult period in better shape than ever before. Weaker competitors may fail to meet the challenge, whilst you have the chance to reappraise your activities and build for a brighter future.”
And although some commentators paint a gloomy picture of severe problems in the world economy over the next few years, others are more upbeat. Take steps now to get your business in the best of health, and you will be well placed not only to manage a downturn but also to expand when the upturn comes.
Bring your business into tiptop condition now, and it will thrive through lean times and the fatter times to follow.