Despite the fact life in the UK has returned to some sort of normality over the past two months, with more businesses and services reopening, as the Covid-19 pandemic stretches on, the state of the economy looks ever bleaker.
Businesses across the UK stated unanimously eight weeks into the nationwide lockdown, in mid-May, that if the economy wasn’t to be kickstarted immediately, they’d face permanent closure.
Almost a quarter of businesses had to temporarily close their doors or pause trading due to restrictions on daily life. On 12th August, unsurprisingly, the UK announced that it was officially in recession for the first time in 11 years. Furthermore, the UK suffered at the hands of the largest economic slump on record between April and June.
While the government and economists continue to throw words such as ‘unprecedented’ and ‘uncertain’ around, adding to the uncertainty, the harsh reality is, the road ahead is going to be a long one, and one which is particularly difficult to navigate.
Recession spells out dark times before we see the light
Now we’ve entered into a recession, businesses will inevitably cease trading.
Spending confidence is gone and as tragic as it is, very few incentives are going to be able to encourage people to leave their houses and invest in products or services.
The overall impact on businesses during a recession, regardless of size, however, is very much the same.
For SMEs there are additional challenges, ones which make it harder for them to survive and this year it is imperative that they carry out thorough small business audits. These include a lack of major cash reserves and capital assets that can be used as collateral and the increased difficulty of getting additional financial support through loans, which all compound the difficulties.
The government’s Job Retention Scheme has worked to ensure staff wages are subsidised in the short term but, because SMEs don’t operate as closely to politics as multi-nationals, they tend t be unable to be in receipt of government bailouts and other additional benefits.
The task in hand for these businesses then is where to place their eggs — it isn’t necessarily a time for growth or profit maximisation, rather a time for damage limitation. Yes, if your business is one which has continued to thrive during the pandemic, then certainly, keep doing what you’re doing. But, if not, you need to implement a plan.
The bottom line is the recession will go away — that’s if history is anything to go by. It will stay for a period of time, lingering like an incredibly unwanted smell, but then it will disappear and the recovery process will begin.
The facts
For SMEs, what does this process involve and how can they accelerate it? Let’s take a look.
• One third of SMEs may fail to survive. Most worryingly for the economy, they account for two-thirds of the UK’s GDP.
• 41% of small business owners fear their business is at risk of permanent closure
• 4% of small business owners have already permanently closed their doors–equating to 234,000 companies
Invest in digital
When lockdown began, SMEs were forced to increase their use of digital, whether that be through meetings, information sharing, or general practices—all had to shift a considerable aspect of their business online.
This new way of operating is the future—for the foreseeable anyway. Those who performed particularly well over the course of the outbreak were ones who had already heavily invested and implemented smart technologies into their processes, whether that be the cloud space or even platforms such as Microsoft Teams.
Unfortunately, physical distancing isn’t going to disappear any time soon and neither will the fears of the general public when it comes to visiting bricks and mortar stores—your business needs e-commerce!
This isn’t to suggest that you take all of your remaining capital and use it to set up an all-singing, all-dancing website. Your investment in digital could be into analytics, discovering what your target market is searching for, or understanding what they need—whether that be in the form of blog posts or FAQs.
Achieve your business goals through digitilisation but do it quickly and in a cost-effective manner.
Be clear
Customers want clarity. Perhaps pre-Covid-19, consumers were happy to spend time thinking about what your business is offering and slowly attempting to dissect your marketing message. Not now though.
Businesses, in past recessions, who have performed well, are ones which offered a clear and succinct message.
SMEs often confuse customers by not displaying the measurable benefits, overly explaining processes, or over emphasising bespoke and tailored services.
Spread it on too thick and you’ll deter attention. Tell them the impacts, the results, the expenditure, and the ROI that your business can offer—once you’ve done this and you’ve got a bite, you can begin the personalisation process, divulging the nitty gritty.
Track processes and improve them
‘If it’s not broke, don’t fix it’, is an aged cliché, that might struggle to survive the recession.
Of course, you shouldn’t spend significant amounts of money transforming already efficient processes but taking time to analyse them and detailing whether or not the journey of the product or service could be streamlined from end to end is undoubtedly beneficial.
First, take a look at what activities and actions are taking place, not just by you, but by the customer too. Understand who within your business has carried out what and whether additional resources were required at any stage. Discover how much time and effort goes in to each process, delving into both human effort and that of automation too.
Once you have collated the information, identify any potential, reoccurring issues, and calculate a resolution.
The exit route from the recession for many businesses is going to be difficult but using some of the aforementioned strategies will aid in a smooth journey.
Sources
https://www.theguardian.com/business/live/2020/sep/11/uk-economy-gdp-jul...
https://wisteria.co.uk/services/sme/audit/
https://www.smeweb.com/2020/08/24/economic-recovery-projections-for-the-...
https://www.bbc.co.uk/news/business-53748278
https://www.investopedia.com/articles/economics/08/recession-affecting-b...
https://smallbusinesscharter.org/business-advice/how-the-government-can-...
https://www.edgehill.ac.uk/e3i/supporting-business/pic/dynamic-recovery-...
Jonathan Gilpin is a content writer specialising in business and finance topics, with a particular focus on Small and Medium sized Enterprises.