“Sustain investment, strip inefficiencies, and mount a drive to increase market share. This will provide you with the greatest chance of long-term success when the downturn passes.”
Written by Matthew Hayes, Managing Director, Champions UK Plc
The last few years have been particularly trying for most and especially small business owners.
Between Covid, Brexit and the war in Ukraine, it has been a challenging time. And now the cost of living crisis is presenting its own set of challenges.
At Champions UK Plc, we specialise in creating strategies that enable our clients to grow in all environments. So, what are the key hurdles businesses need to navigate across the rest of this year?
In the premise of a downturn, people look to spend less, so are more likely to switch to cheaper alternatives or simply just buy less. As a result, businesses may face a decrease in sales during such periods.
A natural reaction to this reduction in activity is to reduce the costs, such as cutting down on marketing spend. Whilst businesses should be strategic with their budgets, it’s important to minimise waste not cost – marketing is not waste, its a business necessity, and so should be efficiently invested in to support a business through periods of downturn and advertise the business as an enticing proposition for consumers and clients.
The second problem you are likely to face is a skill shortage. There is already a skill shortage blatantly evident within SMEs. It’s vital then to create an effective talent retention strategy, to ensure your current struggles are not exacerbated. Maintaining or increasing your quality of output will help serve as a point of differentiation, and help to target that shifting consumer demand during periods of economic uncertainty.
I’d therefore advise you to do six things between now and the end of the year.
1. Keep the right mindset:
This may seem like a small thing, but it’s actually vitally important. You need to maintain a positive attitude and have a clear plan. You have the ability to control your own destiny. So focus on what you can do rather than what you can’t. Set your goals and work towards them one step at a time. Get organised and make a budget.
2.Remain agile and resilient to market changes
Agility should become a top priority for high-growth businesses as they cope with the ramifications of the recession. These new policies will inevitably bring market and pricing changes, where rapid responses from businesses will be crucial to guard slimmer margins. Both long and short-term business plans should incorporate some element of flexibility, working with finance, inventory, and supply chain data to stress test “what-if” scenarios. Then ask questions such as how cash flow will be affected, what evasive manoeuvres can be taken, and how risk can be lowered with preventative measures.
3. Use cloud technology and automation to your advantage:
Achieving a high level of data visibility is only possible in the cloud, essential for running critical aspects of a business, including accurate financial reporting, remote management, and speeding up manual processes. Cloud users are more able to automate key processes and avoid manual work (85% vs 37% of non-users). With a laser focus on cost-cutting, automation is a great way for your business to do more with less, while making employees’ roles more fulfilling.
4. The evolution of supply chain:
Developing an agile, robust supply chain that can survive disruption and shortages is a cornerstone of business resilience. When considering their supply chain, businesses have been forced to react quickly to continual product shortages, delivery strikes, and port delays, which show no signs of slowing down in this recession. Moving from just-in-time towards a just-in-case or ‘more stock, fewer deliveries’ model mitigates the risk of unpredictable shortages or shipping delays yet requires businesses to balance out associated overheads of storage, transportation, and management. This helps protect profitability in a forever-changing supply chain ecosystem.
5. Pick up crucial new skills:
Technology is just one part of the puzzle. To remain agile and be able to react quickly to new challenges, one of the most important factors is the willingness of leaders to pick up new skills as they expand. Business owners and management teams should make time for training despite the new economic pressures, learning from peers, experts, and mentors to further grow and enhance their business.
6. Do three things:
Sustain investment, strip inefficiencies, and mount a drive to increase market share. Focusing on these three areas, underpinned by an increase in overall business efficiency, will provide businesses with the greatest possibility of long-term success when the recession eventually passes.
By placing a greater focus on business efficiency, as opposed to simply cutting costs as an immediate reaction to economic downturn, businesses can ensure their survival and long-term viability – businesses that demonstrate an ability to be agile and efficient are better equipped to adapt to changing and volatile markets, maintaining their competitiveness, conserving their resources, and solidifying their future growth.
Matthew Hayes is managing director of Champions, a strategy-led growth and implementation partner for businesses with market leading expertise across strategy, digital, communications, creative and talent. It works with businesses in a state of transition, enabling them to achieve their strategic vision and increase EBITDA.
For support in developing strategies for growth, visit: championsukplc.com
