Rick Smith is the Managing Director of Forbes Burton, an insolvency and business rescue specialist.
With talk of recessions, there’s a lot of sage advice to be picked up on in the air. Those who have weathered many before are of the opinion that they can be almost waited out through a combination of stoic resolve and simply reducing overheads.
The prevailing opinion however is that this recession looks set to stay until recovery can be assured. The multiple factors that are colliding into businesses from every angle at the moment might mean this takes longer to come out of than usual. Here, Rick Smith, MD at Forbes Burton, explains what to do to prepare:
Get a plan together
Creating a business recession strategy is therefore essential at the moment. Due to the uncertainty, it is now important to rebalance the working ‘on’ to the working ‘in’ aspect of running a business.
You need to allocate more time to working on the business so you can look at the whole process from an holistic perspective. Looking at forecasted threats and ranking their potential levels of impact should also be a priority and will help shape your strategy going forward.
The well-being of your employees and yourself should be paramount. A high percentage of our clients are overworked, stressed out and in a state of sheer panic. Taking care of your team and yourself is so important for the longevity of a business.
People are the epicentre in business and their wellbeing is crucial. Set up ways in which you can check in with staff and take rest even if you feel your business is suffering or times feel like they are getting harder.
Review and change
Another way you can protect your future is to review products and services with a view of dropping unprofitable options and focusing instead on profitable ones.
The efficiency of the machine is really important here, make it lean and don’t look too long ahead. You should be spending effort on working on this because the UK is heading for very uncertain times and things can change very quickly.
Exploring alternative revenue streams is also essential in the long term. If you have been trading for a while, you may have experience in adapting. If you haven’t, try to keep it within what it is you do best within your niche. If not, look at the peripherals of your industry. What will be less impacted and can you make steps now to adapt?
Managing cash flow is also one of the most important things you can do for a business in general. Pay off bad debts first, get reviews in place and ensure that the outgoings all sync up. This is the aspect of finance that sinks the most businesses. Not being able to pay staff, suppliers or partners is a step towards insolvency and if you can work out a way to negotiate a more manageable timescale, then this is all for the better.
You should be building cash reserves to give you the time to address issues in a timely fashion, with a predominately better outcome. Not having reserves means you are effectively firefighting as a business. Make sure also that you are reviewing finance options. This can include grants, loans, invoice factoring and more. Look to reduce costs where you can to lower your break even. Also look into ways to spread or defer your debt to build the reserves.
Remember, your team is also feeling the cost of this so it is important to have a good and regular line of communication. For example, weekly team meetings and structured one on one reviews and collaborations. There are so many steps you can take to improve a business, even the smallest of these can make a huge difference.
Seeking help and advice about business debt or recovery? Talk to one of the Forbes Burton team for a free consultation today.