[MarkTaylor68]

Ten Tips for Weathering the Recession

With the threat of recession looming (or even upon us?), many businesses are asking themselves how they can survive in the face of declining customer spend, tighter credit periods and the general doom and gloom that comes with an economic downturn.

Naturally, the answer will depend on your business model, B2B, B2C, and so on. But, in principle, for the entrepreneur, the 'cash last' approach should always be the first priority, either in a start up situation or for a growing business.

The following are my tried and tested methods for tightening the company belt:

1. Sweat your assets! Only replace hardware when you absolutely need to. Even if items are fully depreciated, as long as they function, keep them.

2. Keep stock moving. Even if you have to cut price, the worst thing you can do is let stock become obsolete.

3. Talk to creditors and free up cashflow. Arranging or extending credit can free up a lot of cash and this can help with…

4. Tactical, below the line marketing. Despite recessionary concerns, keep up your marketing activity. Simple, price-based offers on cheap leaflets distributed locally or other cost-effective methods are often adequate for keeping you on your customers’ radar. Businesses still need to spend and consumers still need to buy - sometimes as a tonic to help deal with the recession.

5. Build up a cash reserve. Arrange short-term finance options early. The last thing you want is to run out of cash so put facilities in place from a range of affordable sources - even if they are a little dearer than longer-term debt, better to have the option than to go 'cap in hand to the bank'.

6. Work on a skeleton crew. If necessary, look to reduce staff hours to those that are core to your business. It may be unpopular but hopefully some of your staff will see it as a short-term measure to ensure longer-term survival and growth.

7. Look to reduce general establishment costs: Use recharged print cartridges, reduce call charges using SKYPE, shop around for cheaper substitutes on key materials - don't be afraid to push your suppliers.

8. Restructure longer-term debt if necessary: lenders are generally happy as long as debt is being serviced and if you’re talking to them, they are reassured of your professional approach to management. A little restructuring is always an option to free up some cash.

9. Where possible, defray overheads. Let out spare office capacity to other businesses, consider joint advertising with partner businesses, share key services and use DIY alternatives for repair and maintenance issues.

10. Longer term, look to move your business model to a lower cost base. By analysing the key costs of the business and the revenue they generate, it is possible to rationalise and focus on core business. Even if it is painful to cut some things out, business is about adapting to the prevailing conditions.

Some of these expedients require you to make some difficult decisions, but it is a route to survival. Ultimately, a leaner, fitter business will emerge, all the more competitive for having weathered the storm. Your only question will be ‘why didn’t I do these things sooner?’

I’d be glad to hear other views on this.

Best wishes,

Mark.

http://www.eriskay-associates.co.uk/seriousStartup.html
http://www.eriskay-associates.co.uk/seriousGrowth.html

[Indizine]

Are we in a recession? I was aware there is a credit crunch going on which is afecting some businesses espeically finance-related, but hadnt heard there was a recession on. Maybe I dont read the news enough!

[IP2]

Agree with you on most of that Mark. These are things most businesses should do regularly not just during a recession, or at least look at. Many businesses spend when they don't need to, however equally a business should decide if replacing equipment and maintenance 'now' will save them in the future, it is important to weigh up every cost.

The one thing I disagree with you on is...

2. Keep stock moving. Even if you have to cut price, the worst thing you can do is let stock become obsolete.

Sure if stock has a 'sell by date', but there are two reasons in todays economic climate for not following that. Inflation is leading to price rises, selling that stock at a discount may leave you replacing it with something far dearer to purchase (restock) and secondly when sales levels are down you do yourself no favours by cutting margin (rather a double whammy!). Large PLC's do this because they have to...well they have to show shareholders that they are still making the turnover. SME's do not! No point working your butt off shifting product for little if any margin, if sales are slow, reduce staffing to match if necessary, but cutting prices just to maintain volume is a mugs game unless you need to impress the city!

[Indizine]

More posting that is repeated on other forums. See my other post on your other thread about duplicate content.

[IP2]

Originally Posted by Indizine

More posting that is repeated on other forums. See my other post on your other thread about duplicate content.

Is Mark the original poster on those other forums?

[Indizine]

well under other user names, but yes as Mark Taylor of same business, that I can see. The other way to spot it is the different fonts used in our forums.

In your settings, your font style is set as is, and nobody goes in and alters the font for each different post

[IP2]

Originally Posted by Indizine

well under other user names, but yes as Mark Taylor of same business, that I can see. The other way to spot it is the different fonts used in our forums.

In your settings, your font style is set as is, and nobody goes in and alters the font for each different post

OK, well as it is Marks own work, I don't think it is inappropriate for him to re-post it here?

As for the font setting thing, I agree, I do get quite suspicious of "newbies" for use of a better word, that post their intro in a different font style, not seen one yet that has made a second post!

[Indizine]

its duplicating content which isnt good and this and the other (and havent checked others) is splattered across several forums. It is best to post it once on your own website and link back to it.

[IP2]

Hopefully MarkTaylor68 will take note of your words of wisdom Indizine!

[Indizine]

well Ray posted on this issue about a week ago when someone else was doing the same thing on A1.