Businesses are facing a really uncertain time with a combination of high interest rates, inflation, the energy crisis, Brexit, currency values, supply chain and recession. In addition to this, it has never been harder to find employees, and we are all wondering what the new world looks like after the pandemic lockdowns.
As the UK now enters recession, all of the problems I mentioned above appear to have come at once rather than spread out over a reasonable timeline so businesses can plan and deal with each in turn. However, that is not to say there is nothing to do. Each aspect of the crisis needs to be focused on, and there are a number of different ways a business can do that.
‘Cash is King’ in a cost of living crisis
Everyone has heard that ‘cash is king’ – yes, we have heard it all before, but having cash available to you and your business makes a difference. Looking at the credit control process and making sure that they are fit for purpose should be a straightforward first step. Taking on new customers is a time for celebration, but it is also a time for caution and, before any significant credit is provided, reasonable checks should be carried out to make sure that the business being supplied is able to pay.
Have a flexible business plan
Having a business plan that you can pick up, review, alter, change, and discuss with others is so useful. A business plan is a bit like satellite navigation. You input your destination and, unless you are the navigation system that is in my car, it should take you where you want to go with the easiest route. However, if you find yourself making a wrong turn for whatever reason, a business should consider whether it tries to head back to the original route or plan a new journey. A satellite navigation system has no hesitation in rerouting a car on its journey. It is always worth considering whether well-made plans need changing.
Communicate with others
When choppy waters are ahead, one of the best things a business can do is communicate with others. Those ‘others’ can be competitors who are facing the same choppy waters or customers or suppliers. Suppliers can be key to the success of any business and if a problem in paying the suppliers on time is looming on the horizon, communicating that problem, and agreeing a mutually acceptable solution with suppliers can often strengthen a relationship. If the struggling business keeps to its promises, the supplier will always listen with trust.
Work on yourself
Of course, one of the big things that owner managers forget in times of crisis, is working on themselves. The stress of managing during a cost of living crisis, can be overwhelming and it is too easy to work in the business, rather than on it. There is never enough time to do all of the work that needs to be done in a crisis, so often it is all about prioritising. It is important that the owner manager’s wellbeing is somewhere at the top of that list because if it is not, the business has yet another risk in front of it.
How do I prevent myself from feeling overwhelmed?
Finally, if all the challenges look overwhelming because there are so many, just work on one. When you have done that, work on another and soon enough there will be a basket of solutions in front of you that will serve the business well. Other difficult financial periods have been time limited so you can expect different crises in the future and more positive times to come. When those positive times arise, it is worth remembering that good times need managing as well as bad times. The desire to succeed when things are good can sometimes outweigh the business’ ability to maintain output.
Of course, a problem shared is a problem halved so, wherever possible, get your advisers onside and supporting you all the way.