The word ‘recession’ strikes fear into the hearts of most small business owners – and with the current downturn described by some as the worst since the Wall Street crash of 1929, for many businesses, there are challenging times ahead.
The recession of the early 90s hit small businesses hard. In 1992 9,000 businesses went into receivership, compared to 1,100 in 2001. Voluntary liquidations peaked at 14,000 then, compared to just 9,000 in 2000.
David Street, is an independent business adviser and the director of the Institute of Business Advisers. He says small businesses may be at a particular risk of losing out during the credit crunch. “They are vulnerable because often they do not have enough control over their own situation.”
Make sure you act as quickly as possible to recession-proof your business. You never know: you could come out the other side with a healthier, more profitable business – whatever the economic climate.
Phil Hames, from the Business Software Centre, offers this advice:
Ask where you are going. Set your targets in a financial plan for income and expenses. You need to know what success means for you and when you are going to get there.
Have a plan. A business plan isn’t just something you show the bank. You need to know how you are going to reach your goals – so if you haven’t thought it all out yet, now is the time to get planning.
Take it one day at a time. Know what your key actions are going to be every day. Write down six priority tasks and number them from 1 to 6 in order of priority. Start with number 1 and work on it till you complete it, then do number 2 and so on.
Know your customers. Why do they buy your product? What do they think of it? What do they read? Who do they go to for advice? The more you know, the higher your chances of retaining them as customers. Make a list of your most important clients, and fill in as much information as you can to dig up more sales opportunities.
Work on your business, not in it. Stand back from your business, and have a long look at it – how do you rate your marketing, operations and finance out of 10? Which comes out top and which is bottom? Start the worst and decide how it should work and how you can measure the improvements.