In our series of four blogs, we explore what SMEs need to know to prepare and succeed during a time of negative economic growth or a recession. This is the fourth blog in the series, but if you’ve missed the others, check them out here:
Blog 1: 3 steps to prepare for a recession
Blog 2: How the government should support SMEs in the expected UK recession
Blog 3: SMEs, here’s what happens in a recession to affect your business
The last in our series focuses on not just how to survive but also how to take advantage of the opportunities the market can present, and actually still thrive. Yes – that is possible and I’ll tell you a little bit about how you can do that!
How to survive a recession, UK
Lucky for some, there are a number of businesses that actually do better during negative economic growth.
This is usually reserved for cost-focused companies, such as second-hand car dealerships. With a preference to being frugal and going for a cheaper, or just no longer being able to afford brand new, things like second-hand options thrive in this type of economic climate.
Another example is builders as consumers favour renovating their homes instead of spending on moving costs.
For SMEs that do not fit into the above categories, there are still three characteristics which embody those businesses that succeed, even during negative economic growth.
1. Focused on profit flow and cash flow strategies
Business owners who focus on the profit drivers and cash drivers and the strategies around these tend to maintain performance even during negative growth.
What this means is, they understand how they generate profit and are aware of internal and external factors that could affect this.
These companies also understand what influences the timing of money coming in or leaving their business.
By focusing on all of these critical areas, their business strategy will be focused on connecting them all together and driving increased profits, ironing out any operational issues and speeding up cash going into the business.
The key here really is to ensure you as an SME are switched on and are ready to adapt, change and learn in order to survive in a challenging economic climate.
Armed with this knowledge and understanding of the levers and impacts in your business, these owners are better and quicker at adapting and responding to tough economic environments and negative economic growth.
2. Perform ongoing marketing and ROI tracking
Although it may be tempting to cut marketing spending during a recession in order to cut back on spending, this is the worst thing you could do.
This will impact the company in the long run making it even harder to recover. Marketing is an investment cost, and as detailed in one of the earlier blogs in this series, business owners should look carefully at how changes (not cuts) are made.
How can you expect to achieve business growth or even maintain your position in the market if you’re not putting the funds in place to promote and market it to your audience?
That statement is true regardless of whether there is a climate of negative economic growth or not!
This brings us to continuing to perform marketing activity and track the return on investment (ROI). SMEs should closely keep track of their ROI throughout the business.
This includes their product and service offerings but also operational and marketing ROIs as well.
For example, they should ensure they focus on which marketing activities generate the highest return on investment and put their budget into these. Refining for efficiency and effectiveness rather than cutting is the winning formula during a period of negative economic growth.
3. Become action focused
During a climate of negative economic growth or challenging business conditions, staying focused and stepping up when required is key. What I mean by this is, if it used to take five sales meetings to win a client but it now takes ten because that’s what’s required to seal the deal, then this needs to be done.
As frustrating as it may be, coupled with the additional time that it requires, but it is what is necessary to generate and win sales. So focus on the actions which are now needed and incorporate them into your systems and processes.
It is also very important for goals and any isses to be shared amongst the team so they can be efficiently solved collaboratively. Remember a problem shared is a problem halved.
Robust businesses also need a strong team culture where employees all pull together and fight through difficult times efficiently and productively. A team that learns and develops by drawing out knowledge from each other and externally is critical.
As the business owner, you set the example and need to lead from the front. So make the process changes, bring the team together and communicate effectively with the team so they can (and want to!) band together with you.
External support is available!
Businesses that are successful understand their skill gaps and either look to fill that gap by learning from others internally or they look outside their business for their training and business development needs.
A business growth consultancy like ourselves can be a great way to receive valuable guidance, fill in those gaps and learn the skills required to run a successful business.
A time of negative economic growth is not the time to hope you have enough skills and knowledge to see your business through the challenging time, nor to simply rely on ‘this is how I’ve always done it’.
With a change in market conditions, a shift in business thinking is required, and an external source, like a business coach, will hold you to account to keep pushing you, as well as be able to provide education and guidance.
As businesses rightly look to cut costs and perform more tasks in-house, now would be a great time to learn the most efficient and effective ways to perform those tasks. Systemisation, standardisation and driving efficiency are areas our clients have particularly highlighted as having been the most valuable support they’ve received from us.
At UK Growth Coach, we are focussed on providing our clients with tailored training and guidance, to allow business owners to come away feeling equipped to make better decisions for themselves and their businesses.
Read our Reviews to see how we have helped many other businesses feel confident and enable them to succeed in business
For more information about how we can support you and your business, please call us at +44 (0)1444 440500, or email me at, Tim Rylatt at tim@growthcoach.co.uk.
