Business Survival Strategies During Economic Uncertainty: Is This Like Covid Again?

Looking for business survival strategies during economic uncertainty? Back in March 2020, Paul Simpson and I set up a free online mastermind group for small business owners seeking advice and support with the ever-changing situation with lockdown, furloughing (remember that!). Now with tariffs, trade wars, and the media talking about recession, there’s a sense of déjà vu, and many owners need proven business survival strategies during economic uncertainty.

As small business owners, we have no control over what is happening globally. We can speculate, worry, or chat about the news, but we risk becoming negative, retreating into our shells, or mentally pulling the duvet over our heads. There is no benefit in focusing on what we can’t control.

It’s much better to focus on what we can control, and almost all of that is inside our businesses. While you can seek assurance and advice from business groups like the FSB, CBI, or IoD, your energy is best spent addressing key areas within your company.

Essential Business Survival Strategies During Economic Uncertainty

Here are the top business survival strategies during economic uncertainty that every small business owner should implement:

Be Aware of Your Retirement Funding and Options

For those closer to retirement than starting a career, falls in stock markets can be particularly worrying. While almost every employee has an interest in the growth of an equity-based pension, those near retirement have less time to recover value after large market falls.

Every business owner has a unique personal situation to review, and I strongly recommend engaging with a financial advisor to evaluate your retirement plans.

As a business owner, you may have value in your business that forms part of your asset portfolio. The big questions are:

• What could that value be?
• How would or could I sell some or all of my business?
• When is the best time to look to sell?

If you’re considering selling your business for the first time, here are my recommendations:

1. Take the Value Builder questionnaire to get an initial indication of what your business could be worth. More importantly, you can start learning about what drives up that value and makes your business more sellable.
2. Seek help from a business broker or accountant to guide you through the sales process. Just like selling your house, selling your business can be tricky, full of legal jargon, and emotional for you.
3. Time your exit to suit you and your family’s requirements. Your advisor can help, but nobody can control the market that could be interested in your business.

Implementing Business Survival Strategies During Economic Downturns

For the majority of small business owners, retirement or selling isn’t on the agenda. What’s far more important is implementing effective business survival strategies during economic uncertainty – dealing with a potential recession, increased inflation, and possibly a decline in demand for products and services.

There will always be some sectors or niches that are unaffected by recessions, but even then, an increased level of market uncertainty can slow down activity.

Here are my top recommendations to focus your energy right now. They are applicable at all times, but fear of recession can stimulate us to act faster:

Business Survival Strategy #1: Turn Up the Sales Volume

If you expect your market to slow down or reduce in size, a critical business survival strategy during economic uncertainty is to turn up your sales volume. This means:

• Increasing the level of enquiry and proposal follow-up
• Revisiting all old enquiries and proposals that didn’t progress
• Getting closer and more proactive with your current customers – they may buy more from you or simply feel more loyal to you
• Engaging more proactively with all your contacts, referrers, and advocates

Business Survival Strategy #2: Credit, Cash, and Debt Control

Another crucial business survival strategy during economic uncertainty involves cash management. If you don’t have up-front credit checking of new customers and credit monitoring of existing customers, set up these processes now. You can’t afford to take on business that won’t pay.

Be prepared to ask for more cash up-front or enforce more proforma invoicing. Have very clear and consistent credit terms with your customers – don’t assume they will read the small print – explain the key parts of how they should pay you. For more detailed guidance, read our blog on the importance of cash flow management during challenging times.

Finally, have a process for collecting and chasing debt that is consistent and monitored.

Business Survival Strategy #3: Seek Efficiency Where You Can

The most common first reaction to a recession and potential or actual fall in sales is to cut costs – a fundamental business survival strategy during economic uncertainty. Nothing surprising there, but make sure it’s the right type of cost cutting. Here’s what to consider:

• Identify hidden inefficiencies in your business. These show themselves in rework, delays, customer queries or complaints, or longer than expected production or service times. Having some form of efficiency or process improvement project/workshop will identify where you can cut costs and probably improve service levels and quality. Learn more about creating standard operating procedures for your business to eliminate inefficiencies. If you have never done that sort of improvement work, don’t be surprised if you find more than 10% cost savings.
• Review outdated overhead costs that you no longer need. Classic examples include levels of insurance cover set years ago and not updated, or memberships of organisations you no longer use or value.
• Examine discretionary costs that don’t impact the ability to service customers.

The Most Overlooked Business Survival Strategy: Get Support and Advice

In times of uncertainty and change, life as a small business owner can be even harder than usual. While it feels natural to throw yourself into the trenches of survival by implementing the business survival strategies during economic uncertainty mentioned above, there is also a counter-intuitive approach: seeking the support of other business owners.

Connecting with peers can help you:

• Get assurance that you aren’t the only one dealing with changing times
• Find owners who are prepared to help and encourage you
• Increase your motivation and accountability to take action to make your business navigate current challenges