How to Recession-Proof Your Small Business

It was officially confirmed this week that the UK is in the worst recession since records began. I think we’ve all known it’s coming but nonetheless having it in black and white is somewhat unnerving. COVID on top of Brexit is a tough pill for the economy to swallow but here we are and we all need to ride the storm. 

For small business owners it can be a terribly worrying time. Many of us live in households where the small business is the sole income or perhaps another income provider has been made redundant after furlough. It’s a common story.

But we mustn't panic. Recessions also provide opportunities for the nimble, ingenious, canny and downright brave. In fact, I would like you to be reassured that most of my current clients started their businesses during the last recession. They saw problems that needed solving and whilst everyone else was busy staring into space, they got busy and started small empires. 

Recessions are great levellers, taking down unsustainable businesses. The strongest may survive, but the smallest are fixed to thrive. As a small business you are better placed to react quickly to changing conditions, and are likely to be more resourceful, creative and resilient. 

For those that plan ahead and keep their eyes peeled, the future remains bright. So now is the time to start evaluating your business and create some recession proof strategies. Trust me. This is your time to shine.

Seven strategies to help your small business survive a recession:

1. Be better not cheaper

Do not cut your prices unless you cut your offer. Cutting prices is simply a race to the bottom - a terrible strategy for buying market share that has no longevity and ends up with you giving away the shop. It’s ok to offer a less expensive product but don’t cut into your profit or eat into your own market share by essentially downgrading customers unnecessarily.

2. Focus on your customer

More than ever it is important to be really connected to what you customers want and need. They are your salvation through a recession if you are dialled in to them and their needs. Creating meaningful relationships will ensure loyalty and valuable feedback to which you can react fast. 

Be on their side. For example: Show your customer how to make what they buy from you last longer - helping them save money will ensure they eventually spend it with you again!

3. Create community

Develop a community around your business and other small businesses local to you and work together to support each other. Recommend one another’s services, buy from each other when you need products or services. Help each other by sharing offers.

You can also join online communities to get support too. Sometimes it helps to get a wider perspective from different locations and sectors. Please do come and join our new Small and Strong Together Facebook group for small business owners, where we share ideas and support each other. 

4. Be lean but not mean

Don’t compromise on quality but can you cut back on unnecessary frills? Perhaps you like to have fresh flowers at your reception, but instead of ordering them from a shop can you cut your own or use plants instead?

Don’t offer customers bottled water, instead use a filter or just splendid tap water! The smell of freshly brewing filter coffee smells much nicer than expensive and disposable coffee capsules too. Think about sustainable alternatives that still feel like a quality option. Don’t damage your brand by going cheap.

Lean also applies to inventory, keep it just in time and only buy in bulk what you know you can sell or use in the next 30 days.

5. Take control of your cash flow

Don’t allow invoices to roll on unpaid, speak to your customers about prompt payment and have the courtesy to do the same for your suppliers.

Don’t take on costs for big projects without deposits up front. Arrange staged payments for big projects (I always do this for website builds with clients - one third up front, one third half way and one third on completion).

6. Balance revenue streams

Can you diversify your revenue streams? Add a product line to appeal to a sector of the market that you have not previously attracted? 

Rent out a spare portion of your workshop or an unused office? 

Can you find new outlets for your products or services? Try different platforms outside of your store or website where you can sell? Etsy or Not on the High Street for example? You will pay commission but there’s nothing to pay if you don’t sell anything.

7. Invest in marketing - time or money

If you are already investing in marketing, then it is not the ideal time to cut back but back sure you are tracking results to see a return on your investment. Remember this is the time when your competition will most likely reduce on their marketing budget so you have the opportunity to be more visible.

But if you don’t have money to invest in marketing then learn to DIY and invest your time instead. You can find inexpensive courses to help you learn then use that knowledge forever.

People will always need plates

There is always going to be a market for most necessary products and services. It’s a case of priorities and getting in front of the customers who prioritise what you offer. 

Remember, people will always need plates.