The UK is expected to enter a recession later this year.
What is a recession?
Put simply, a recession is classified as; a reduction in economic activity with two successive quarters with negative GDP growth.
What is GDP? A country’s gross domestic product (GDP) is a measure of the size and health of its economy.
With the growing likelihood of a recession, businesses need to prepare.
Being around for over 50 years, Aston Shaw has seen its’ fair share of economic downturn and have teams of specialists to help you and your business mitigate any potential risks to navigate the upcoming uncertainty
We’ve compiled 8 top tips to help prepare for a recession and shield your business.
1: Keep up the Marketing but adjust your strategy
In a recession, it’s easy to cut marketing budgets to save money, but the truth is… your business needs a strong marketing strategy in place during a recession even more than it did during times of growth. Without new customers coming through the door, it’s hard to keep your business growing.
Your competitors will still be marketing and it’s essential that your company remains visible to the consumer.
Instead of cutting the marketing budget, try adjusting your strategy to make sure your business goals have the support they require and any expenditure is being utilised fully.
Repeat customers tend to spend more, while often recommending your company to their friends and family. Focus on pleasing your existing customers and watch the recommendations come in.
If you are looking to cut business costs, Aston Shaw can help.
Our business cost reduction service can help with the following:
- Electricity & Gas
- Water
- Insurance
- Telecommunications
- Card Payment services
- And more
Get in touch to discuss your situation with one of our specialist advisors today.
2: Watch the cash flow
Managing your business’s cash flow should remain a top priority when preparing your business for a recession. Every penny will count, so you’ll want to know what money is going where and how it’s being spent.
Our cash flow forecasting service will ensure you have a full understanding of the cash flow in your business and will help you prepare for the negative effects of a recession.
We can help you by:
- Negotiating bank overdrafts
- Obtaining additional funding from banks and private investors
- Credit control
- Invoice factoring
- Financial control
Find out more about our cash flow forecasting service here.
As well as this, if your business requires extra cash due to the effects of a recession, invoice financing can be used with our cash flow forecasting service.
Invoice finance allows funds to be drawn against invoices as they are raised, not when your customer pays you. Find out more about our invoice finance service here.
3: Tighten up on your corporate governance
In a downturn, the best companies have a strong corporate governance culture. This can help you to survive. Part of this is ensuring that the company has had a financial audit trail.
If in doubt, contact Aston Shaw. We specialise in auditing your financial trail which will put you in a better position for a recession.
4: Get borrowing
It’s much easier to borrow before a recession starts than during one.
Banks and lenders will tighten their belts during a recession, enforce stricter checks, and reduce the amount businesses can borrow. If you are planning to borrow, then it will be worthwhile to assess your credit capacity now and see how much you will be able to borrow.
Get in touch today to find out how we can help…
5: Focus on your people and be transparent
Although downsizing is inevitable for some businesses during a recession, staff retention should remain a top priority.
Your staff will naturally be concerned about their positions. Your co-workers are the lifeblood of your company so it will be more important than ever to keep morale high. Remaining transparent and addressing concerns as they arise, and even pre-empting worry.
The recession will end. Operations will return to normal.
It would be unwise to be at a reduced capacity when normality is restored. Recruitment can be a long and costly exercise which is an unnecessary expense during a recession.
If you find yourself shorthanded during this period of uncertainty, try outsourcing and finding freelancers to take up the gap.
If all avenues have been investigated, reducing hours or redistributing internal staff can make a huge difference without having to let anyone go.
Our HR consultancy team can help with your next steps. Get in touch today to find out more.
6: Calculate your costs
If you do need to cut costs, it’s a good idea to use key performance indicators (KPIs) to monitor which services are adding good profit and value to your company and which services aren’t adding much. Analyse your break-even point and plan to drive it down.
Being free of any financial burdens is a great way to ensure you’re ready for the recession. This can also give you a better understanding of which of your services should be pushed as a priority over less effective options.
7: Diversify and expand
While a recession is not typically the time to look into new avenues of profit, it could be the perfect time to expand your services into an adjacent area. Diversifying is a method that has proved successful for many companies and could help offset any loss of sales for your other products. It is also important, however, to not spread yourself too thinly.
Talk to one of our business development specialists today for bespoke advice on how to diversify your business.
8: Forge alliances
Businesses in recession need to be agile, adaptable and constantly evolving. Being able to reach out to new partners and form an alliance with them is one way to make sure your business doesn’t struggle through tough times.
Aston Shaw can help your company through this process with our Mergers & Acquisitions service. Coming together during tough times makes us stronger.
Key takeaways:
- Don’t fall short of your marketing
- Retarget your spending to optimise return on investment
- Keep an eye on your cash flow
- Borrow before entering a recession
- Focus on your staff and downsize only when completely necessary
- Analyse your break-even point and plan to drive it down
- We are stronger together
Bear these points in mind and your company can remain steadfast against any obstacle the potential 2022 recession will throw at you. Take the time to focus on your brand, customers, and staff to unlock the key to success.
If you’re concerned about the effects a recession may have on your business, get in touch today for a free, no-obligation consultation to find out how we can help you safeguard your business in the event of a recession.
