The Top 5 Recession Busting Tips
Hasn’t the last few years been a bit of a rollercoaster!!
In March 2020, the world experienced an unprecedented pandemic through COVID-19. The aftermath of that pandemic is still being felt now, but the financial impact hasn’t really been seen. If anything some businesses have seen an uptick in their numbers.
Just after we thought COVID-19 had slowed (literally the day after Boris told us we can crack on), Russia invaded Ukraine. Imagine what the history books will say about the last few years!!
As accountants, we look at history a lot. What we can learn from history is that the UK is a country which swings from boom to bust over a given timeframe. That timeframe is usually every 10 years.
Cast your mind back to 2008. This was the start of the last recession (known as the credit crunch). Following the usual records, we were therefore due a recession around 2018, which has yet to happen. Part of the reason is the funding many people (furlough) and businesses (bounce back / CIBL loans) received during the COVID-19 outbreak.
So, we thought we’d put together 5 top tips for you, which we hope you will find useful to get your ship in order before a recession:
1) Don’t stop the marketing
One of the first things businesses do is cut back the marketing budget. This effectively means you are seen less by potential customers & existing ones. Perhaps a better way to look at this is the type of marketing you do:
- Do you have a website? If not, get one asap.
- Are you on social media? If not why?
- Do you speak with your key customers at least once a month? If not, why?
- Do you follow up on potential customers? If not, why?
2) Get your cashflow in order
Profit margins tend to shrink in recessions. If this happens, cash reduction is a slow inevitability.
If you run out of cash, you’re gone. Simple as!
- Cut back on unnecessary spending? This also means you as a shareholder too. Get your budgets in order and trim the stuff you don’t need.
- Chase your debtors before they become due. Get this automated and your cloud accounting system working as it should. This habit will mean you have an early warning on potential bad debt.
- Create a cashflow forecast and keep it up to date. Absolute necessity. If you don’t know when a problem will hit, it’s already too late! If you need help, shout at us. We’re ok at the numbers stuff!
3) Keep existing customers
It may sound simple, but keeping your existing customers happy could be the key factor in keeping your business alive. Treat them well, exceed their expectations and add as much value as you can. This doesn’t mean go in cheap though!!! That is a massive false economy.
4) Do what only you can do. Delegate the rest
Your time is the most important resource your business has. You need to be doing what you do best.
- If you are terrible at buying from the right supplier, stop and get your team on it.
- If you are doing the company accounts in the evening, stop. You’re wasting your time! Get someone else on it.
- If you tend to give discounts to customers as you like them, create a system which means you need to get approval on any quotes before they are sent!
- If you are not spending at least a third of your time with existing customers and trying to win more work, you need to take action. Get out a pen and paper. Write down what you’re doing and see what you need to remove. Think about the biggest and easiest wins. Nail them early doors.
- You will be the reason the business got successful in the first place. Stop holding yourselves back and get out there to win more work.
5) Invest in your team
Redundancy and recession have (historically) gone hand in hand. But redundancies are expensive and time consuming (P&O comes to mind!).
Remember, making important team members redundant means they will be working for your competition once the recession is over. Is that something you want?
A cheaper alternative is to look at the business culture and create higher productivity. If you don’t have a proactive HR professional on the payroll, get one on a consultancy basis (we work with some amazing ones!). They can save you a fortune and enable your team to make much more cash.
It is tempting to put these tips off as you’re busy. But history has taught us that those businesses who bounce back quickly from a recession (and indeed grow) are the ones who take decisive action before they need to.
Our advice, pick 1 of the 5 tips and move it forward today.