1. Don't panic – do plan
Like the old Ministry of Information posters say – Keep Calm and Carry On. Panicking is the worst thing you can do because it can disrupt your business and harm morale but, at the same time, don't believe that you can just carry on regardless. Challenging trading conditions are an opportunity to assess where your business is going, and how it's going to get there. If you haven't already, create an adaptable business plan with short-, mid- and long-term goals that will ensure that you can react quickly to any external changes. Take into account best and worst case scenarios, so you'll know what to do if times get tough.
Smart companies focus their time and resources on their best opportunities, rather than wasting time on business they are unlikely to win. Look to where most of your income comes from and your secure markets, and put your efforts into keeping this business.
3. Know your financial situation
It's vitally important that you know where you stand financially, do not bury your head in the sand. As part of your business plan, you should have prepared a budget and cash flow forecast, which should be updated on a monthly basis to give you early warning of potential problems and help you to see how you would cope if, for example, your business suffered a 10% decrease in sales.
You should also keep an eye on how the rest of the world judges your financial affairs by checking your credit rating and addressing any inconsistencies; these may stop you from accessing the credit you deserve.
4. Increase value
In a recession, business customers are often more concerned about buying from a reliable supplier who will remain in business long term than from one that appears desperate by slashing prices. In the recession of 2008-9, many successful small businesses focused on improving customer service and the perceived value of their product as consumers (both business and personal) became more focused on quality and value over price. For some, this meant they were even able to put their prices up, but this decision needs to be made carefully.
5. Protect your business from bad debt
If the last recession taught us anything it is that lack of profits isn't what causes businesses to fail, it is lack of cash to pay wages, bills, rents and suppliers. To ensure a healthy cash flow, you should make sure that your credit control procedures are robust. Set clear credit limits for all customers, bill promptly and enforce your debt recovery policies.
Stay alert for indications that customers might be experiencing financial problems by looking for changes in payment patterns and using business monitoring and credit checking services. Reassess credit limits regularly and make sure you actively pursue unpaid debts.
You could also consider credit insurance to protect against potential bad debt and insolvency of your clients.
6. Get the right funding
Though harder to come by, there is financial help available to businesses through government funding, peer-to-peer lending and other sources.
7. Know how much you're spending
Keep a firm grip on your business's costs. Any money you save on essential costs has a direct impact on your bottom line, so shop around for the best deals. We can help Forum members get competitive rates on utilities, telecoms, fuel, card processing and purchasing costs – call us on 0845 130 1722 to find out more.
8. Manage your time
Think about how you spend your working week. Ensure that you are using your time wisely and working towards short, medium and long-term goals set out in your business plan. It may be more useful for the company for you to take a step back and work on your long-term strategy or securing new business than being on the ‘shop floor'.
9. Get the most from your staff
Your staff are one of your most valuable assets. Find out if they have any additional skills that can help the business in tough times and put them to good use. You may be able to save money on hiring new staff.
10. Don't give up on marketing
Quite often, under threat of recession, a company's marketing budget can be the first thing to go. But building awareness and reputation for your brand is key to riding out the storm, and marketing doesn't have to cost a fortune – read our tips for marketing on a shoestring budget.
11. Speak to an expert
Whether you're looking for ways to grow in difficult trading conditions or you've got some tough decisions to make about the future of your business, speaking to an impartial third party can help to put things in perspective.
It is particularly important to take advice if you're dealing with financial and employment issues to ensure you don't make a bad situation worse.
Our expert business advisers are on hand Monday to Friday from 8.30am to 5.30pm to deal with member's queries on any business issue. Call us on 0845 130 1722.
In a recession it's important to keep a cool head and make smart decisions for the future of your business. Find out what you can do to help protect your business.
How your business can survive an economic downturn