As the credit crunch continues to dictate the future of small business, insolvency, client cut backs and longer payment cycles have become an economic reality. For many business owners, when profits fall, the immediate temptation is to dramatically cut back on areas which are not perceived as ‘business critical.’ However, many business analysts suggest that the recession provides the perfect opportunity to invest in the key areas of your business, that will help you increase existing market share and emerge from the recession with a stronger proposition.  In this post we consider the main areas of your business that you should aim to expand.

Marketing
In many companies, marketing is not perceived as central to core business. Subsequently, in an economic downturn, the marketing budget is one of the first things to go. However, as competitors are also scaling back, now is the time to negotiate better rates, premium positions and use your increased brand presence to increase market share. Investing across marketing disciplines now, can help support and grow your brand in the context of economic instability.

Customer Service
Though business may be declining, scaling back on your current customer service proposition can result in a negative brand experience for remaining customers. Directing newly available resource into improving customer service, will help you gain competitive advantage and promote brand loyalty.

Workforce
In a recession, redundancy is an obvious reality. However, if your business is to survive the recession, it is vital that you continue to incentivise and invest in your workforce. In an economic downturn, good staff are in demand, it is vital that they feel motivated and secure in their position, so that they have the skills overcome the everyday challenges they face.
Though the pressure to cut costs in a recession is immense for SME’s. It is vital that you evaluate the relative impact on your business and cut the right costs.

In yesterday’s post we reviewed a business suffering as a result of the current economic context. Today we aim to give you some practical advice on how to turn your business around if you think you are heading for an unstable future.

Follow the Leader

Turning your business around during a recession is the ultimate challenge of your leadership ability. All areas of your business must be deconstructed and assessed diligently with brutal honestly, decisions must be made quickly and executed correctly.

It does not look like the current economic situation will improve any time soon. Therefore, it is vital that business owners adopt a pro active approach and strategically plan for the worst case scenario.

Cash is King

If your business is in turmoil, it is not lack of profit or future business prospects that will put the final nail in the coffin; it is the lack of cash flow. If you are in a situation where you are falling behind with payments and waiting for clients to pay you, it is time to focus on how you manage your cash flow.

In a hostile economy, communication is key. You must continue to talk to creditors and reassure them that you are a sound financial proposition. This strategy can be applied to all suppliers, from retailers to the taxman and the bank.  Schedule meetings, explain your situation, establish timescales for payment and keep to them.

Streamline

Though it easy to perceive the recession as a negative situation, it is also important to recognise that many companies are formed at this time and due to the lack of finance available, they are forced to strip back their expenditure and decide what is really necessary.
It is not simply a matter of rationalisation; it is about introducing the concept of efficiency to your business and communicating the need to have a back-end system.

Seek Outside Opinion

When your business is in crisis, it is hard to take a step back and see the bigger picture. Therefore, it is advisable to involve outside professionals. Their experience and different skill sets will provide vital strategic insight and ensure you are in the best possible position to survive the recession

True, the economic solution looks bleak, so be advised, that if your business is already feeling the strain, deconstruct your company as it currently stands, seek external advice and make the necessary change.

Only a year ago, the term ‘Credit Crunch’ didn’t exist. Now, it has become a phrase that defines not only a political party, but a generation. In this series, we consider the impact of the recession on the SME sector and why it is more important now than ever, that small businesses address not only viability but how to survive the recession.

Business Turnarounds
Failing to plan is planning to fail. We look at how to plan your way out of a recession before it is to late.

How to Not Only Survive, but Thrive!
According to many business analysts, the credit crunch is the perfect opportunity for company formation. In this post we give you top tips on how to make sure your business thrives in the recession

Business for Sale
Apparently, considering an acquisition in times of economic crisis, breaks a number of key business best practice rules. In this post, we consider why buying a business in a recession could be key to your company’s growth strategy.

Is it Time to Sell?
As redundancy becomes a reality for an increasing number of people, so to does number of people looking to begin the company formation process. We investigate the current market, and advise the best time to sell your company.

The news that publishing group EMAP was closing the iconic Smash Hits magazine after 28 years of trading, not only signified an evolving market but also the impact of not consistently evaluating your business. In this post, we consider how to spring clean the various areas of your company to achieve your strategic goals.

Pay attention to detail, maximise profitability
We operate in a dynamic market with constantly changing prices. Evaluating every element of corporate expenditure and making sure you are getting the best deal is one way to increase profitability. From the premises you occupy, to your IT systems, taking the time do a comprehensive sweep of outgoings, can make you focus on what you spend your money on, and be a great way of cutting costs.

Resource ‘v’ Reward
For most companies, employee’s salaries and incentives are the biggest cost. Finding alternative ways to incentivise and motivate staff, such as flexi-time, increased holidays and staff outings, can increase both productivity and morale simultaneously.

Review what you out source
Running a small business requires a broad skill set. As a consequence, from Marketing to IT, many businesses choose to out source. Constant assessment and evaluation of the partners you choose to work with, allows you to determine ROI and, essentially, cut out unnecessary expenditure.

Finally, it is important that you strategically spring clean your business, on an ongoing basis. The more systematic the evaluation, the more you will notice the financial benefits.