Will your business survive the upcoming recession?

A recession is expected both nationally and globally. Amid unclear Brexit deals and wavering outcomes, it is difficult to confidently predict the economic future. As stated by former member of the Bank of England’s interest rate setting committee, David Blanchflower, the economic parallels with the period before the banking crash of 2008 are difficult to ignore. It is challenging to prepare for the unknown, but businesses have survived through recessions before and they will do so again. Whether you own a small or large business, and whatever you specialise in, you must put effective strategies into place to safeguard your company against the unpredictable financial future.

Are we approaching a global recession?

The UN has warned that there is a possibility of a global recession in 2020 due to weaker growth in both advanced and developing countries. Factors such as trade wars, currency fluctuations, and Brexit are all amounting to an uncertain global economy. According to the Unctad report, “global growth will fall from 3% in 2018 to 2.3% this year — its weakest since the 1.7% contraction in 2009”. Because of this global strain on economy, we are expected to encounter rising levels of debt (in both developing and advanced countries), as well as a “global downturn that could increase unemployment and inequality” (as stated by Kristalina Georgieva of the International Monetary Fund). Redundancies and a decline in job vacancies on an international basis are expected to follow such a crash, with unemployment rates increasing at an alarming rate. 

Recession: What does it mean for the UK?

The global landscape will inevitably damage the UK’s economy. The US trade war with China has caused a larger drag on global growth than anticipated, and the UK will be on the receiving end of the economic repercussions. What’s more, the looming prospect of Brexit poses different threats to the UK’s economy. At best, the uncertainty caused by Brexit has created a hesitant consumer base in the UK. Customers are spending less and are more cautious of businesses than ever. It is a difficult time to maintain customer loyalty, as would-be consumers are tightening their purses in the fear of a looming financial disaster. 

A no-deal Brexit is prone to send the UK down the slippery slope of recession. According to expert forecasts from Andrew Sentence and David Blanchflower, leaving the EU with no deal will plunge the UK into its first recession in a decade. Boris Johnson’s new deal might negate this threat, but after the transition period (which will last around a year), we could still end up in a no deal situation if a free trade agreement isn’t decided. 

Again, it is not easy to predict the definite financial repercussions of a deal, or a no-deal, Brexit. Expert speculations have ranged from optimistic to dire, but it is important for business owners to prepare for the worst nonetheless. 

Preparing your business: What should you know?

Despite uncertainty, there are ways to prepare your business for the looming recession. Businesses that prepare for every eventuality are the ones that survive and thrive in the face of adversity. Leaving it too late to implement a recession strategy could be your undoing, so get ahead of the game and prepare for a post-Brexit Britain. Here are some key strategies that will help your business face economic uncertainty:

- Prioritize your existing customers — with the lack of trust and growing apprehension, consumers aren’t spending as much. Because of this, it is essential that you focus on your existing customer base during testing financial times. This will increase brand loyalty and grow customer confidence. Offer them benefits and reasons to stay true to your brand.

- Implement some extension and adjacency strategies— a recession is not the time to start looking into completely new ways of making profit. However, you can’t let your services become stagnant. Adjacency strategy is the optimum solution to this — find an area adjacent to your core product or services to expand into. Extension strategy is similar: take your current service a little further and offer new and exciting opportunities or products to existing customers. Ensure that you have a flexed forecast so that the business is fully prepared for all possible outcomes of this new strategy.

- Invest in powerful alliances —alliances, acquisitions, mergers are effective approaches during a recession. Alliances offer a great way to expand your business without investing in anything completely new during times of uncertainty. 

- Outsource where possible — you can save time, financial worries and money by simply outsourcing key elements of your company. Outsourcing your accounts department may allow you create scale and flexibility within your organisation. 

- Cut down inventory costs — look to see if costs can be cut down for your business without sacrificing the quality of the products and services it provides. This will help to take the pressure off your finances. 

- Stick to your marketing budget — often, brands make cuts to their marketing budgets in response to financial anxiety. However, this will spell disaster for your company. There is no time more crucial to maintain your marketing efforts and show customers that your brand is tackling the recession and winning.  

- Tighten up on your corporate authority – companies that see a slump in performance are more likely to survive if they have good corporate governance established.  Part of this is ensuring that the company has had a financial audit.