An official recession has just been declared. Your business is your livelihood, so it’s important that you are prepared for emergencies, recessions and other threats to your business. Businesses have already closed doors, employees have lost their jobs, and entrepreneurs have been forced to adapt. Most industries will be affected by a recession because most businesses are interconnected.
For many, times will be tough, but it doesn’t mean the end. There are things you can do to protect the business you’ve built up. To survive and even prosper in the coming months, diversification and sensible financial strategies will be key. We examine what a recession means for the state of business and how you can come through stronger below.
Protect Your Cash Flow
Cash flow is the lifeblood of your business. Money must continue inflowing and outflowing for optimum business health, with the obvious goal being that you bring in more income than you must spend on expenses. You’ll have expenses as long as your business exists. It can be admittedly hard to keep the cash flowing in. Recession-proof your business by implementing strategies to keep the cash flow moving, from increasing sales or billable services to trimming unnecessary expenses.
Managing cash flow is one of the biggest concerns for business owners. In the ‘olden days’ accountants work was quite reactive with client meetings once a year that would throw up any problems that had occurred over the past twelve months. Here at Nordens, however, we’ve always taken a more pro-active approach. It’s important to meet with clients as often as possible, and to be available whenever a potential issue rears its head with advice on the best strategies to move forward. But importantly, it’s brilliant to meet regularly to assess positive changes that can be implemented to make the business run more smoothly and profitably – not only in times of stress, but for constant improvement too.
This approach of constant contact means you can identify and tackle cash flow problems well before they get out of hand. Contact our strategic department to find out if a weekly or monthly cashflow forecast is suitable for your business.
Focus on Customer Retention
It costs five times more to acquire a new customer than to retain an existing customer. Further, focusing on customer retention can increase business profits from 25-95%! If you want to recession-proof your business, focusing on customer retention is the way to go.
To retain existing customers, you’ll want to let them know that you appreciate their business, that you’re available to offer support when they need it, and that they have exclusive access to features/promotions that non-customers do not. You can increase customer retention by:
- Following up with customers after they have made a purchase
- Investing in email marketing that keeps customers engaged with your brand
- Offering multi-channel (website, social media, phone, etc.) support
- Giving existing customers special deals on your latest products or upgrades
- Asking customers for their input (via surveys) or for positive reviews
Expand and adapt what you offer
Focusing on what you do best and making sure you do it as well as possible should of course take priority. However, if there’s an opportunity to create something new to sell or offer, you should aim to diversify to mitigate risk. Things are changing around the world, so make sure you’re keeping up with what your customers need and want.
What was relevant and popular before coronavirus and before a recession may come to a quick end. Know your market, know your competitors, and work out how to offer something above and beyond that meets new needs. Examine your industry and think about what’s missing or what others are doing badly. Use these conclusions as an opportunity to strengthen your own position.
Maintaining strong relationships and dialogues with suppliers and customers is crucial at this moment if you want them to return when spending power resumes and risk appetite grows. If you offer a service, can you now create a product that your existing customers can use?
Use Technology
There’s no better money-saver than modern technology. This includes using accounting and inventory software so that you spend less time on balancing the books. Our Accounting2You bookeeping department, is our specialised service to provide you with efficient, personalised assistance from an accredited team of professionals.
Thanks to recent digital innovations, the pace of change moves swiftly in the world of business. We know that keeping up with shifts within the economy and the respective industries is a worthy challenge, yet it’s the wider framework of technology that has become a prominent focus for businesses of all shapes and sizes. Nobody should still be using paper. Yes, that’s right, even you.
Did you know that we are Xero platinum partners? Clients of ours, are able to connect to a range of banks via Xero. We specialise in working with some of those banks; we can help with setting up bank feeds, and are knowledgeable about accessing bank loans and streamlining payments through Xero. We are able to provide high quality training and advise you on apps that link to Xero and work well for your particular industry. Let the apps do the hard work, not you. Take a look at our A2Y bookkeeping page here to find out more.
Should you need assistance from any of our departments or with implementing any of these tasks to recession proof your business, get in touch today on 02085300720 or email businessdevelopment@nordens.co.uk
