Tips to help avoid the panic and sleep better at night
The economic atmosphere can feel full of doom and gloom. All it takes is turning on the television or scrolling through social media to see story after story mentioning the economic downturn, rising inflation rates and the cost-of-living crisis.
As a business owner or senior leader, we must be aware of these things but not dwell on them. This might be your first economic downturn, or you may be a seasoned pro – whatever the case, times may be challenging but we can come out of this stronger together.
With decades of experience, Andy Horn, IntraLAN CEO, has seen more than his fair share of recessions. To help your business overcome the challenges associated with economic turmoil, he’s put together a list of his top tips for surviving a recession – and emerging stronger than ever before.
Is a recession looming?
The last two years have been a rollercoaster of economic proportions, from shuttering businesses during lockdowns to a surge in buying behaviour once the economy reopened.
Lockdowns are hopefully a thing of the past, but new challenges are on the horizon. The war in Ukraine, supply chain upheaval, Brexit complications, raw material shortages, rising inflation and interest rates and labour shortages cloud our vision of the future. According to Bloomberg UK, we aren’t heading for a recession because we’re already in one.
What does that mean for businesses?
Firstly, it’s important to recognise that your business isn’t the only one going through this. Everyone is being affected by the rising costs and supply chain issues. While your own customers are more focused on where every penny goes, we know that this can be a period of uncertainty for many business owners and IT leaders who have little choice but to continually re-budget and replan.
Here are a few things you need to remember as we traverse this period of economic turmoil:
- Set and review pricing and budgets often – There is only so much your business can absorb before you pass on those price increases to your customers. Stay flexible and agile.
- Communicate with customers often – No one likes giving (or receiving) bad news, but communication with your customers is integral to maintaining transparency. It builds trust in your brand even when they aren’t happy about price increases or delays in delivery.
- Focus on your brand – Spending smart during downturns is part and parcel of business, though now isn’t the time to reduce marketing or pause all projects. We’ll explain why a little later.
Assess Your Business’s Health
Performing a business health assessment will give you a complete view of how your business is doing as we enter this recession. Look beyond the standard metrics like recurring revenue and profit, and examine:
- Aged debt
- Technician and engineer productivity
- Customer exposure – how much of your business do they make up? Is it too much?
- Overhead ratio
Even if you run a financially lean business in a good financial state, a recession is an ideal opportunity to re-evaluate and get your finances in the best possible position possible. One of the most significant considerations is credit control and ensuring customers pay on time and satisfy their payment terms. This will enable your business to budget and forecast more accurately as inflation, interest rates and supplier pricing changes.
Be Transparent and Communicate Often
During stormy economic times, you can’t communicate with your customers too much. Right now, they’re seeing the same economic stories as you are – and they’re equally as worried about business.
As a managed service provider (MSP), being there for our customers, providing them with advice that will help them through this challenging time and being open and honest about delivery delays, product challenges, and pricing will pay off in client loyalty.
“We suggest having regular contact with customers whether through proactive emails and phone calls or in-person meetings,” Andy shares.
“Have an open discussion about the state of the industry and the challenges you’re facing. It’s the ideal time to suggest how they can optimise their time and efficiency to save time and ultimately money, helping their bottom line.”
IT, Digital Services and Brand Awareness Are Key to Post-Recession Success
During tough financial times, it’s often our first response to cut back on anything we deem as ‘unnecessary’, and IT investment and marketing are often the first to enter the spotlight – but that is the wrong road to travel down.
Customers may be keeping their wallets closed and selling seems like much more of a challenge than pre-recession but cutting back on these important initiatives could hurt you much more in the long run.
Digital services, IT infrastructure and how you reach your customers are critical to the ‘build back’ period post-recession.
We suggest considering the following:
- Emerging Tech – Can emerging IT tools can help your business become more agile and increase efficiency, allowing teams to focus on other projects that generate revenue?
- IT Automation – Can automation increase productivity and customer care?
- Cybersecurity – Everyone is feeling the pinch, even hackers. We expect to see an increase in cyber threats as the recession lingers and times get tough(er). Are you staying alert?
Expect Customer Behaviour Changes
As customers are more vigilant about their spending and where each penny goes, we’ll likely see longer sales cycles and greater scrutiny around contracts, flexibility, payment plans and trial periods. Being aware of this will help you forecast sales targets and maintain employee expectations around commissions.
Be firm on payments. There’s a thin line between being helpful and someone taking advantage. If a client is paying late, it’s important that you speak to them straight away and chase payment. The government recently updated guidance on payment terms and your rights – it’s vital to educate yourself on the changes.
Being flexible on payment times can help your customer, but if they don’t pay after 60 days, they are becoming a business stressor, and hard questions need to be asked.
Keep Track of The Marketing and Your Competition
Not all businesses will react to the recession the same way. If you see your competition disappear from social media, this provides your company with an opportunity to capture the interest of their customers. Knowing your market share and going after these opportunities will help maintain and grow business continuity.
IntraLAN is always by your side. We can help you navigate the recession by providing streamlined IT support and services using the latest software and leading-edge network solutions. We’re together in this.
Contact our team today to find out how we can help you streamline business, cut back on manual, time-consuming tasks and make your team more productive – saving you time and money.