Could your business survive a recession?
Are you concerned if your small business can survive a recession? With recent economic forecasts, it’s something more and more and more of us are thinking about.
According to the Office of National Statistics (ONS), 57% of people in the UK were spending less on non-essentials due to the increase in the cost of living. This could have a significant impact on your business if you sell non-essential items.
With the further rise in energy costs looming ahead along with predictions we are heading into a recession, we will see even more cutbacks from our customers. So what can we do to prepare?
How to help your small business survive a recession
Don’t wait for a recession to happen. Plan and get prepared now. The businesses that do some forward planning will be the ones best placed to survive. Start building up cash reserves now and cutting down on unnecessary costs (see tips below).
Review your financial situation
Now is the time to redo your sales and cash flow forecasts. This can help you analyse if you are likely to hit any crisis months where you are going to be low on funds and prepare what to do about it.
Reduce your energy costs
With soaring energy costs, you are unlikely to be able to reduce costs but do everything you can to keep any rise in costs to a minimum.
- Turn off all electrical equipment at the end of the day such as computers and printers. It may only contribute to a minimal degree but every little helps.
- How many lights do you have on? Do you really need them all? Get one efficient desk lamp and use that if possible.
- Turn down the heating and put on another layer of clothes.
- When the weather is super-hot, rather than set up an air conditioning unit or turn on a fan, adjust your working hours to when your workspace is cooler if your business allows.
- Cut back on the tea and coffee or fill up a flask to reduce the number of times you use the kettle.
Re-negotiate with or switch suppliers
When was the last time you reviewed prices with your suppliers? Check what you are paying and have a discussion as to whether they are able to give you a better deal. Has a new supplier come into the market with more competitive pricing? Go do your research and see if there is a better option out there for you. It’s highly unlikely to get any sort of deal at the moment but it’s worth keeping an eye out just in case.
Cancel unused subscriptions
How many subscriptions have you signed up for over the years that you no longer use? Or how many could you downgrade as you are not using all the services within your package? Go through them all now and you may be surprised how many you are signed up for that you no longer need. Get them cancelled now or stop any auto renewals.
Create additional revenue streams
- Consider affiliate marketing or putting Google ads on your website.
- Sell your photographs to stock photography websites.
- Write an eBook or create an online course.
Offer lower-cost options to your customers
If you run a face-to-face business such as a masseur or lifestyle coach and your usual sessions run for an hour, offer a shorter session at a lower cost. This may keep your service affordable for some customers who are having to cut back. Consider a 20 or 30-minute ‘maintenance’ service.
With 42% of the population cutting back on non-essential travel according to the same report by the ONS, customers may stop travelling to your business if you are not immediately local to them. Whilst it may seem to be counterproductive to increase your own travel costs, consider travelling to your customers if your business can provide a mobile service.
The last thing you want to be doing is travelling from one place to another and back again all day. This is not time efficient or fuel efficient. Check if you have customers who live in the same area. Contact them to see if they would be interested in a mobile service on a certain day of the week. This way, if you get enough people, you can bulk book customers in the same area on the same day.
Move your business online
You may well have done this already during the Covid 19 lockdown and if you have stopped doing it, now may be the time to resurrect online services which may be more cost-effective for your customers. If you want your business to survive a recession and if you haven’t already looked at an online service, get creative and consider if any part of your business could take advantage of working online.
Start to offer one-to-one training or group tutorials. Record training videos or create a full course for customers to purchase.
Yoga and fitness classes saw a huge increase in online activity when they moved classes online during the Covid 19 lockdown. Here are a few ideas for other businesses:
- Masseur – online tutorials on how to do self-massage
- Hairdresser – online tutorials on how to style hair
- Property Stager – diagnostic for styling improvements via photographs
- Gardener – advice and landscaping design via photographs
- Photographer – offer online photography courses and camera training
Rent out equipment/space
If people start cutting down on paying someone to do something for them, but the jobs still need doing, consider if you have any equipment you could rent out. Do make sure all items are fit for purpose and you have adequate insurance.
A gardener could rent out a lawnmower, hedge trimmer etc
If you have office space, rent out part of it or create a shared office. (I did this myself a couple of years ago. Where there was a decent size office, I shared it with another business owner. We both had our own space for our own desk, filing cabinet etc. This way we could share the rent and keep our costs down). If you currently rent your office space do check your rental agreement.
Focus on marketing
The fight for a share of the market when customers are decreasing is going to be more competitive than ever. Up your marketing activity. Look at how you can stand out from the competition and take your share of the market. Look at ways to attract as many new customers as you can.
Review your marketing channels
Whilst focusing on your marketing activities, make sure your marketing channels are up to date and as effective as they can be. Get a website review and make any necessary changes. It’s no use driving traffic to your website if your speed is too slow or your site is full of broken links. Use a reputable company such as Seahorse Creative which use a human being to review your site rather than a company that simply runs an online report via a site-checker site.
Ensure your social media channels have the correct information displayed and are consistent with your branding.
Give exceptional customer service
By giving exceptional customer service you increase your chances of retaining existing customers and also increase the chance of them referring you to someone else. This helps retain as much income as you can and increase your income with new customers.
To find out ways to review and improve the customer service you provide to make you stand out from your competitors, hop over to The Small Business Kit and watch the Customer Experience module. It’s just £29 to join. You get immediate access to this module and all the others and can cancel at any time.
Give your business the best chance to survive a recession
It will depend upon your individual business as to how many of these ideas you may be able to implement, but whatever you do, do something! If you want your small business to survive a recession the worst thing you can do is bury your head in the sand and hope it will go away.