Navigating recession: What to do NOW!

Management & Growth, News,

The Office of National Statistics released official figures last week showing the UK is now officially in recession. This is because a fall in Gross domestic product (GDP) in two or more consecutive quarters constitutes ‘a recession’, and GDP for the October to December 2023 quarter dropped by 0.3%, after a fall in the July to September 2023 quarter of 0.1%. 

Experts tend to assess the health of an economy on a number of factors, rather than solely look at the headline GDP rates, but the word ‘recession’ is always splashed all over news headlines and those headlines and stories create increased apprehension and uncertainty.

While it may be a time for concern, the news won’t have been a shock to business owners, and there are some proactive measures that can reduce its impact and even present opportunities for growth. Some of the measures aren’t rocket science, but they will make a significant difference to the resilience of your business.

Let’s take a look:

Financial Resilience

Assess how your business’s finances currently look. 

  • Can you strengthen cash reserves and reduce unnecessary expenses? 
  • Are there ways you could diversify your income sources to avoid being overly reliant on just a few major customers or services?

Prepare (or update!) cashflow forecasts and identify times where income might reduce or cashflow will tighten. Consider whether you can you make any contingency plans or use careful timing for payments on essential expenditure to improve matters.

Analyse customer behaviours

During economic downturns, spending behaviours will obviously change. Priorities switch to essential purchases while non-essential or non-urgent purchases may be held. 

Think about how this is likely to affect your sales. Can you address these reservations in your marketing or pricing, or address the objection in your follow-up conversations?

You need to convince your customers that your product or service should be part of their current needs and overcome any price sensitivity.

Review your supply chain

It’s a good time to review your supply chain and consider how resilient it is. 

  • Do you have key suppliers that may struggle in a down-turn? 
  • Are there alternative suppliers that it may be wise to investigate as a back-up option? 

If you’re in a relatively strong financial position, it could be a good time to support a trusted supplier, perhaps in return for reduced pricing or longer-term loyalty.

Strengthening your relationships with these key suppliers and having open conversations with them can also help you to anticipate and address potential challenges.

Nurture team morale

Continue to invest in and nurture your team’s morale. They’re reading the same headlines that you are and can easily become anxious about the future, which can affect productivity, the service they provide and create a downward spiral. 

Consider cost-effective strategies that will help you retain talented staff. For instance, flexible work arrangements, skill development programs and performance incentives can help to keep your team incentivised.

Speaking to your team and gathering their input may also bring some innovative and beneficial ideas that will help your business to adapt. They are at the coal face every day, and will see the business from a very different perspective!

Strategic Investments

While there are uncertainties in any economic downturn, there are usually also opportunities. It can be well worth exploring investment opportunities if you’re able to do so.

Look for undervalued assets or potential mergers or acquisitions that could be completed for a reduced price. You may be able to capitalise on the downturn to buy assets at a favourable price and position your business for long-term growth.

Long term vision and a positive attitude

Maintaining a long-term perspective will reduce the risk of you getting caught up in negative thinking, which is likely to stifle your adaptability. This is paramount in tough times!

Remember a recession is, at its most basic, simply a technical marker of the UK-wide economic landscape; it is not necessarily an indicator for how your business will perform. Maintaining a positive attitude will help you see opportunities that may become available, small changes that can make a difference, and help you retain the drive to see them through.

Successfully navigating a recession takes good planning, careful decision making and adaptability. After every recession though there are businesses that emerge stronger and more competitively than they went into it. We’ve weathered recessions in our own businesses, and helped clients do so too. If you’re concerned about the future, and would like to chat through how to do that, please get in touch.

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