EIGHT WAYS TO GET YOUR BUSINESS RECESSIONREADY

the uk economy stagnated towards the end of 2022, narrowly avoiding recession. This year, financial powerhouse Goldman Sachs forecasts a 1.2% contraction as the cost-of-living crisis continues to depress incomes.

A downturn presents both opportunities and challenges for business owners. Graze, Poundland and JD Sports were all started during a recession. And what works in other industries can be applied in automotive, so there’s hope for everyone running a business that you can not only survive but succeed.

Here are eight ways to recession-proof your business to help it weather the current economic storm.

Cashflow Comes First

When the economic outlook is challenging, business owners need to take a long, hard look at their cash position. Sir John Timpson CBE, who turned his eponymous chain of cobblers into a household name, says: “It’s always a good idea to presume that there will be problems ahead, so keep your business tight. Don’t wait to have a cost-cutting campaign.”

Every couple of years, the Timpson management analyses every part of the business to see where the fat can be trimmed, so challenge yourself and your team to reduce expenditure by 30% to see what ideas emerge. Sir John advises comparing your cash position today with the same day last year. “If it’s lower, you’re losing money,” he says. “Never mind what the company accounts look like, if you have less cash, you’re losing money. It’s important to get the basics right if you want to survive a recession.”

Flush Out Your Risky Customers

Are you owed money? Are there any repeat offenders on your books? Carl Reader, serial entrepreneur, business adviser and author of Boss It, warns that now is the time to weed out the bad payers.

“Use your industry knowledge, check your historical transactions with customers, and even pay attention to gossip,” he says. “If you get wind of a bad payer, they need to go.”

However, before axing too many customers, check that your payment process is as robust as it can be. “Can you go to them before the debt is due and remind them to pay?” asks Reader. “If a payment is late, get in touch to tell them, then email or call every day. Consider using an external credit controller if you don’t want to do it yourself.”

Reader also says that now is the time to review your business model and try and get payments in the form of recurring revenue, such as subscriptions, or at least get some money up front. “Could you charge a deposit?” he asks. “I have a subscription model in my business and it brings certainty to our forecasting.”

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ADDRESS SKILLS SHORTAGES

“The skills shortage will be with us for the long-term,” says Julian Jack, senior membership manager at the IMI. “We’re facing the biggest gap in vacancies for the last 20 years in the automotive industry.”

A recession may encourage more people to return to work, but they may not have the skills your business needs. “Employers need to get planning now,” says Jack. “Now is the time

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BET ON YOUR MOST SCALABLE GROWTH CHANNEL

Review all the ways that you win new customers and bet big on your number one channel. “Go all-in,” advises Eric Partaker, business coach and former head of business development at Skype. “For example, if you typically generate leads through events, are you attending enough of them? If you identify new leads through cold email outreach, are you sending enough emails?”

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STRENGTHEN SUPPLY CHAINS to create apprenticeships and upskill your workforce. Look at the trends that will impact your business. Are your people trained in EVs, the latest windscreen technology or body repair techniques? If not, this is the time to invest.”

The IMI has created a Return on Investment (ROI) Calculator to help business owners analyse the potential impact of hiring an apprentice.

A recession can really test your supply chains. Before problems can arise, audit your partnerships and ensure that the businesses you trade with are robust and resilient. When was the last time you checked in with your supplier and had a frank conversation about their pain points?

The IMI’s Julian Jack also recommends reviewing all your contracts to check you’re getting the best deal. Have your costs gone up? Could you negotiate better payment terms? “Tomorrow is for those who prepare for it today,” says Jack. “If you start to prepare now, you can recession-proof your business, and the IMI is here to help.”