In reality, most of us already know how to solve our problems; we just need someone else to tell us and focus us in on them. So, as the credit crunch continues, Phil Young explains how to survive a recession and come out on top.
There is a chance that we might be entering a period of recession, with the ‘credit crunch’ affecting the money markets and many countries watching with baited breath to see if the US economy nose dives into recession and drags us all in with it.
The realities of a recession will mean that consumer spending will become weaker and therefore any service provider, retail outlet or manufacturer that is reliant on this ‘consumer spend’ will find it hard going.
Recessions are never nice things to go through, as I have seen over the past 25 years of my own career, having gone through two such sticky patches – with one of these whilst running my own business. These are times that we see job losses occur and the impact that this has on families and, in turn, communities and other businesses.
At such times, an increased emphasis will be placed on HR professionals; this is inevitable as employees want to be kept informed about their jobs and employers start to think about potential rationalisation or even merger and acquisition opportunities. Such things may also bring increased workloads for HR in the areas of TUPE, employee contracts and some elements of recruitment.
But as a business you can survive them by following and acting on a few basic principles:
Lower your outgoings
You need to take a hard look at your outgoings and decide what is and is not essential. Just imagine the steps you would take if your personal income dropped – what would you do? I would imagine you would take a hard look at what you spend your money on and cut back in a number of areas. This is exactly the same approach that should be taken in your business. For example, you may pay for private medical insurance for certain employees; do you need to be paying for such insurance at this time? If it was a choice between private insurance or losing jobs, what do you think your staff would choose?
You may have some tough decisions to take about the people who work for you. However, make sure that your workforce is kept informed of any situation you find yourself in and how this might affect them. You will need their ‘buy in’ more than ever at times like this, and if they understand the circumstances then they should not be surprised about any decisions you take. Yes, you may stand the risk of some of them leaving, but this may not happen – ‘out of the frying pan’ and all that. Remember, people and their knowledge are assets to your business and having to re-grow a knowledgeable workforce is far harder than shrinking it. Reducing FTE numbers should be a ‘last choice option’ in my opinion.
Do not stop marketing activities
As the consumer spending bubble decreases in size, you need to continue to grab a share of this decreasing pie. You will find that your existing customer base will be impacted as companies fold and people tighten their belts and investing in marketing activities at times like this is more important than ever. Use marketing to enhance your business and personal profile to differentiate you from the others. Emphasise your qualities as a business, playing on your strengths, your people’s skills and your longevity. Also make sure that you utilise your own network of contacts at this time, put your feelers out for more custom by making it known to everyone that you are on the look out. If you do not inform people then no one will know, so keep informing them.
Hold your nerve
It will not only be your business that is going through this, everyone will be. What you must not do is panic or make knee jerk decisions that will affect your business proposition once you pull out of a recessionary period – they do not last forever. Always consider as many options as you can, seek advice from others (this does not always have to be paid-for advice), and use your network of contacts.
These pointers are probably nothing you don’t already know, or an exhaustive list by any means. You are probably doing some of these things already, but reviewing them now just may help save your business.
Phil Young is founder of Johnson-Young Associates Ltd, a leading consulting and troubleshooting service for SMEs and larger organisations, with particular expertise in Interim IT management. For more information visit www.j-ya.com