It is, by now, a matter of record that the UK is in a recession. We know why, and the fact that the reason is something beyond our control does not change the fact of where we are. What also seems clear is that, as things stand, we are primed to expect a recession that will last beyond this year and for at least part of 2021. That’s a worry for any business which relies on consumers – which is almost every business – given that recessions harm consumer confidence.
It is possible for businesses to survive a recession; this is a simple fact, given that there have been several recessions in the last few decades, and there are plenty of businesses that have dialed up a century or more in operation. If your business has never been through a recession before, you might be wondering how this one can be managed. The truth is, there is no guarantee – but you can certainly follow a few sound principles which might help keep things running.
Keep your team together and healthy
Any business that wants to beat the coming recession will be cognizant of the importance of a strong team. This has a particular meaning given the public health reason behind the present recession. Numerous businesses have been deeply affected by the virus due to having working conditions that place large numbers of people together, risking cluster infections. Looking into ideas such as warehouse automation, you can move members of your team around so that they aren’t required to work in those conditions. Those who can drive could potentially join the delivery effort, for example.
Reassess long-term plans
In a recession, the certainties that we have come to rely on suddenly crumble to dust. You’re no longer playing by the old rules – or, at least, the rules have changed, so you need to change with them. You may have had a plan for the next five years, even a decade, but that plan is gone now. Start to think in shorter blocks until the recession has passed – and even then, don’t start to plan for longer until there have been at least two quarters of sustained growth. During a recession, everything becomes about surviving to the end of the next quarter without redundancies, without risky borrowing, and so on. That’s all you can expect.
Prioritize your debt
Businesses don’t go bust because they don’t have profits anymore, they go bust because their profits were not enough to service their debts. It therefore follows that the first thing you must do in a recession is look to get a handle on debt. The highest-interest borrowing should be serviced as a priority, as that is the debt which can quickly strangle your business. Try to avoid any new borrowing, and be open to inward investment at this time. Maximizing what’s coming in while you try to cut what’s going out is the most important thing now.
A recession is always a tricky time for a business, but you can come out the other side of it and thrive. It means resetting your priorities for a while, but it can be done.