Who remembers the ‘good old days’, when business was good and managing it was easy? Well perhaps that is an exaggeration of the time before COVID-19 but certainly, for a lot of businesses, circumstances seemed more certain and less stressful. Yes, the uncertainty of Brexit kept many business owners awake at night but that has been over-shadowed by the impact of the pandemic across the UK and globally.
Hazlewoods Director, Ryan Hancock has reviewed the key considerations for business leaders in making a business recession proof and maintaining a #BusinessForTomorrow.
For full detail from the Hazlewoods experts: Download the guide here
Back in those good old days the talk amongst financial strategists and credit experts was ‘when will the economy start to downturn’. There was a belief that a recession was overdue and the advice was to start making preparations to recession proof your business now. Of course, no-one predicted that a recession would be kick-started by a global pandemic but having posted a fall in GDP for two successive quarters, the UK has met the technical definition of a recession.
Historically, this may have been cause for many business owners to be extremely concerned but somehow, it does not seem to be having the same impact as it would have had we not just been through a lockdown period. That is not to say that businesses should not be concerned, more that their focus has been on adapting and, for some, survival.
It is interesting to note that the advice to business owners on how to recession proof your business before COVID-19 and now has not really changed very much. In fact, many of those suggestions and strategies have had to be implemented during the crisis in order to keep the business open. Now that we are past that initial lockdown and ‘technically’ in a recession, businesses are starting to focus on the medium and longer term.
Cash flow monitoring
We all recognise the importance of monitoring and understanding your businesses cash flow, where the pinch-points are, making arrangements to cover short-falls. This has become a critical part of many business meetings over the last six months and will continue to be so for the foreseeable future.
A natural extension of monitoring cash flow is the need to continually review the business’s financing requirements. You may not need it now and hopefully you will not need it at all, but having an open and honest relationship with your bankers or other finance providers will be of great benefit should you need their assistance.
Having multiple revenue streams is a tried and tested way to secure your income during a volatile economy. We have seen many businesses expand the scope of the offerings, providing complimentary products or services to meet the needs of their customer base.
Once you have established your multiple income streams and identified those that are viable in the long term, you must then look at retaining and securing those streams. One of the best ways to do that is to differentiate yourself from other providers. Every business will need to consider a different approach but the primary aim is make it extremely difficult or impossible for your customers to want to move their business elsewhere.
It is easy to become inwardly focused in times of crisis, however, the role of senior management needs to be much wider than that. You should never take for granted your customer/client base, they are your first and most reliable source of business. It has often been proven that taking care of you customers, providing them with a positive experience, showing an interest in them and understanding their needs is the best way to secure future income streams.
A business’s supply chain can be just as important as its customer base. After all, the reliability and quality of supply will often have a direct impact to your customers experience. Understanding your suppliers needs and circumstances while at the same time securing alternative options will mitigate the risk of significant disruptions to your revenue streams.
Invest in a strong management and finance team
No one can be expected to do everything, particularly when the environment is so volatile. Having a strong team around you with the right skill sets is key to keeping the business on track. The finance team will become your best friend, keeping an eye on cash flow and providing a quick response when things are not going to plan.
Invest in technology and infrastructure
The pandemic exposed the importance of having the right infrastructure in place. The move to remote working and the increased reliance on technology has been a struggle for those businesses that were not prepared. Keeping up with the latest IT developments requires a lot of time, resource and funding but the consequences of falling behind can out-weight those costs. We are experiencing a time where remote working, for many industries, has been proven to be effective. This has instigated a change in mindset and possibly a cultural change along with it. Investing in an infrastructure that is a safe, efficient and effective will elevate any business toward a successful future.
No leadership team can plan for every eventuality. What should be important however is that they do not become too comfortable or reliant on circumstances staying the same. Continually testing and challenging the business strategies and the teams will keep everyone thinking, moving forward and on their toes. Running a variety of scenarios, both good and bad (and very bad!) will help senior management become familiar with difficult situations and in turn to react in a positive and constructive way.
There may not be a definitive formula to truly make a business recession proof, but as recent history demonstrates, UK businesses and business leaders have the skills, ability and the desire to weather the economic storms that they are faced with. While there remain challenges and uncertainties ahead, there are lots of reasons to remain positive not least of which is the way in which businesses have been supportive of each other and the people who are working within them.
If you would like further advice on how to make your business recession proof in order to maintain a #BusinessForTomorrow, speak to Ryan Hancock at firstname.lastname@example.org or 01242 680000.
For further insights and advice to support you and your business visit www.hazlewoods.co.uk
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