4 Hacks to Survive Economic Challenges for a Small Business

It’s not hard to understand why many small business owners are filled with trepidation when the economy slumps or if they’re bombarded with unexpected challenges.

A global fuel crisis, rising inflation and labour shortages are just a few worrying factors that can lead to a drop in business confidence.

Small businesses are the backbone of the UK economy, making up most of the private sector and providing over 60% of total employment in the UK however the British Chambers of Commerce’s reported that 1 in 3 businesses were reporting a decrease in cashflow and 24% reporting a decrease in domestic sales. This has led to a large volume of businesses moving into crisis mode, cutting back on costs where possible, freezing recruitment and generally ‘lying low’ while they wait for the situation to improve.

While it is clear that times are tough, the financial difficulties being faced by the UK is forcing businesses and their owners to innovate and change the way they operate. Just like the pandemic did for remote working, the economic climate can help businesses grow and adapt to improve their situation and it many cases thrive now and in the future.

So, what action can you take to ensure your business gets through a challenging period unscathed?

It’s never a bad idea to draw up a business survival strategy. Taking stock of your current situation and making preparations for trickier times will not only help to weather the storm but will help shore up your business in the long term, too.

Small businesses may not be able to impact the outcome of national - and global - events. but by taking action to protect their livelihoods, they may find they are not just able to survive but actually thrive.

Read on for the survival hacks that can safeguard your business.

1. Become Customer Focused

It’s much cheaper selling to existing customers than it is finding new ones. In times of financial difficulties or economic worry, a large proportion of small businesses cut back on their already small marketing budgets. Having a small marketing budget is a poor business decision already but reducing this will not help you, it will have the opposite effect. You need to be smart and use the spend smartly by using smaller amounts on attracting new customers and target your marketing spend on contacting your existing customers. Your existing customers already know, like and trust you therefore you reduce the sales cycle, this can bring quicker sales into your business and boost your revenue more immediately.

Now one of the first things that will happen when the economy struggles is for prices to rise, this also means your costs increase. While it may not be possible to avoid passing rising costs on to your clients, think about other ways you could make them feel valued and supported. This could include loyalty discount schemes, cashback rewards or offering payment by instalment to help them spread the cost of buying. All of these methods of adding value also offer the added benefit of providing valuable data on buying habits which can then be used to improve your marketing strategy. Make sure you keep on top of marketing, whether through social media, newsletters or local SEO, to ensure your customers are aware of what you are doing and how you can continue to help them.

Finally, NEVER overlook the importance of great customer service. Bad customer service loses UK businesses up to £12b every year. So ensuring every customer has a good experience should be paramount, you don’t have to be perfect but when things go wrong you need to be their for your customers, keep them informed and engaged. Any complaint you receive should be dealt with satisfactorily for the customer, doing this alone can boost customer loyalty, the amount they spend with your business and your profile. Word of mouth is a powerful thing in business and relationships, its better to be on the right side of a bad situation when it comes to complaints. You can’t please everyone and turn them into a fan of your business but ensuring you’re consistent, decisive and customer focused will ultimately support your business to survive, thrive and grow.

2. Reduce & Manage Costs

At a time when every penny counts, simple, common-sense steps to reduce costs can really help improve the bottom line for your business.

The beginning of the year is a great time to examine your spending and practices, and to work out where you can make savings.

Look at any expense in your business that isn’t sales generating related, sales should be last because if you’re not selling then money isn’t coming in. Big ticket items in your business are usually offices or properties, these have large costs and can be downsized or removed from your business. As mentioned previously, the pandemic showed business owners and leaders that having an office location isn’t crucial to do business. Consider whether you could reduce overheads by switching to a smaller office or coworking spaces. If you’re a brick and mortar business (location where customers need to come to you to shop) then this is different for you. Alternatively, you should be considering re-locating, downsizing, re-negotiating rates, better utilising the retail space you have (sell more stuff in same space), etc. Think about how you can do more with what you already have.

Other ways to cut costs include: shopping around for the best deals from suppliers, insurance companies, broadband providers and mobile phone contractors; streamlining your marketing, and reducing travel costs through virtual meetings and home working.

3. Protect & invest in your staff

This may not be the time to spend on professional development such as sending staff to training and conferences, but focusing on areas such as health and wellbeing can be a way to boost productivity and loyalty.

It will also help you to cut back on the cost of absences through illness. Research shows that absenteeism costs businesses more than £550 per employee per year and 70% of small businesses say staff absences are affecting profitability. The main causes of absence are minor illnesses and mental health issues, which demonstrates the potential benefits of employee wellness schemes and wellness action plans that support employees to improve their mental health at work.

Absences could also reflect inflexible work practices and other issues. Offering the opportunity to work from home as well as from the office, aka hybrid working, is seen as a perk by many employees as it allows for improved work-life balance and caring commitments. In addition, hybrid working is also proven to boost productivity and collaboration, cutting down on workplace overheads - saving an average of £4,000 a month in rent for businesses that employ 50 people or fewer.

Where it is essential for staff to be in the office, it is important to minimise the likelihood of seasonal colds, flu and of course Covid spreading. Good workplace hygiene - from cleaning equipment to washing hands - can help.

4. Look for help without fear or hesitation

There is a variety of support available to help small businesses get through the challenges of the coming months. The government’s Energy Bill Relief Scheme, unveiled in September 2022, provides a discount on the unit price of gas and electricity for anyone on a non-domestic contract. Local councils also offer small business support funding to eligible companies, including sustainable business growth grants. You could also research the support currently on offer to businesses from charities.

If you feel your business could benefit from the advice of an expert, there is a range of mentoring and online support available to help SME business leaders improve the performance of their businesses.

We are part of Enterprise Nations Help to Grow mentoring programme that helps business grow and thrive, there are many programmes like this designed to help business navigate challenges for free. You may want to go that bit further and invest in a coach or consultant to help you grow your business and streamline your current set up, this is a great way to get advice, guidance and support to grow your businesses revenue and reduce costs. The hardest thing for business owners is to see this spend as an investment but it really is that simple. Our average clients who work with us to grow their business spends roughly £4,200 per annum with us and we help them grow their profits to between 60-110% in the first year. It’s potentially one of the best investments you can make, you get access to knowledge, proven strategies for business growth and support to get you to where you want to be. You can learn yourself by taking courses or navigating the ‘free’ and spurious resources online claiming that one strategy will get you a multimillionaire but this can take you years to get through the rubbish to find the right fit for you and your business that doesn’t cost you another 10 hours in your business per week.

If you want to explore how business coaching or mentoring could help you and your business just get in touch and ask for some advice. You can use our social channels, email, WhatsApp or call us on the contact details below.

Michael Foster

michael@purpleyak.co.uk

07521866898