How I Thrived During the Last 6 Recessions

How I Thrived During the Last 6 Recessions

If you’re reading this, you are more than likely in business, so you already have survived the early stages of the recession triggered by the Covid19 pandemic. Having been in business for over 30 years, this is the sixth downturn that Ridgetown has endured. During each economic downturn, we have learnt several valuable strategies of how to survive and thrive during challenging times. We are pleased to share our real-world business knowledge with you as you grapple with the new world during this Covid19 pandemic.

An economic downturn is like being dropped onto a desert island with a very unprepared group of strangers. Some people will hide under a tree having a breakdown, some people will struggle through every day, just about coping. Meanwhile, survival ninjas are the rarity. While everyone else squabbles over resources, they build a shelter, light a fire and catch some fish. The difference between the ninjas and the others is the survival tactics in their head. They entered the survival situation already equipped with the knowledge of how to survive and thrive.

Just like on the desert island, investing in vital survival strategies benefits your business in the long run.

Decisive Action in the Early Stages of the Recession

Hopefully, you have already sensed the impending economic impacts on their way and have sensibly taken decisive actions that may include some of the following:

• Cost cutting exercises
• Staff furloughed through the government scheme
• Payment negotiations with your suppliers
• Talks with your landlord
• Availed yourself of all the Government support available via:
  • Business interruption loan
  • Business bounce back loan
  • Business grants
• You may even have been forced to reluctantly make redundancies

Having taken some of the above measures, you may have avoided trading at a loss. You may now be breaking even or even be making a modest profit.

A Brave New World for Business

Most businesses instinct would be to save money, avoid spending and hunker down to weather the storm. My experience tells me that this is not the best option, even though investing and trying to grow seems counterintuitive. Businesses that buck the “no spend” trend seek to analyse their businesses investing in key areas to make them stronger and more resilient. These businesses actually thrive in the long term.

The Next Steps to Rebuilding your Business

• Recommence your marketing, placing your focus primarily on strengthening your brand and digital marketing. Ensure your expectations are realistic because market conditions are currently much lower than usual
• Invest in your products and services. Yes, albeit counterintuitive, investing in stronger services strengthens your business. Using R&D tax credits to support this investment will help to offset your costs
• Carefully examine your supply chain. Analyse the value of your current suppliers. Make long term plans to secure more products and services locally
• Examine your employee efficiency – Do you have the right people with the correct skills in your team?
• Evaluate your customer relationships – Are your profit margins sufficient for all your customers?

Strengthening Your Business – The Lessons we have Learnt

Consulting with lots of businesses, we see many common themes arise again and again.

• IT Systems Overhaul – Like most companies, your IT systems could probably be improved upon. A sluggish or fragmented IT estate causes teams to work inefficiently and work in silos. Disparate IT systems that don’t integrate with each other fragment processes, causing service disruption. Seeking appropriate guidance on your IT infrastructure and investing in upgrades of hardware (or cloud) and software technology benefits company performance. This allows you to market your company effectively and improve upon your operational efficiency. Many IT consultants offer free assessments of your IT systems with recommendations of how to improve. IT software is now all focused on joined up process management that helps companies to work faster and more productively. Collaborative software solutions like Microsoft Teams speed up decision making by 17%. Digital transformation is the quickest way to improve efficiency, saving you time and money.

• Improve Your Products and Services – Why should you improve your products and services?

• Offering old or irrelevant products and services will cost you business. Buyers will naturally gravitate to a competitor, who is keeping up with market trends, making it easier to buy. If you don’t continually assess and upgrade your product options, you can lose your market edge and shrink, even in a good economy.
• If you step back to analyse your products or services, more than likely, you will see that they can be improved upon. Performing a competitive analysis within your space can help guide this activity. It gives you a deep awareness of where your strengths and weaknesses lie.

What are some ways to improve your products and services:

• Branding – Packaging up services in a unique and enticing way is a cheap way to achieve this (for example, giving a process or service a specific name)
• Sales copy – This means the words you use to describe and promote your products and services. For most companies, this can usually be improved upon. Strong clear messages, compelling sales copy and a website that is easy to navigate is an easy way to improve your sales conversion rates. This actively helps you to make more sales.
• Assess your pricing – Your services may currently be purely price related. Perform a market comparison to benchmark your pricing metrics.
• Value – Are your services really delivering value for money?
• Critical assessment – Step back and look at your services critically. Ask yourself if they are really what your customers want. Performing a keyword search term analysis can help you to understand this. What are people searching for, how many people are searching for it and how often are they looking?
• Uniqueness – Is there any aspect of your service that is unique that people cannot get elsewhere
• Offer the best – Is there an option out there that is better, quicker or easier?
• Optimisation and innovation – Continually assess the products that you sell – Change and adapt them, bring in new ones to keep up with the market or develop your own
• Profit margins – Analyse your product offerings and ensure that your products are profitable to the right level across all your product groups
• Service alignment – Why is service alignment important? Are you really offering what you actually provide? Don’t forget, offering means the terms and wording of your marketing campaign messages. The whole process of what contracts you eventually acquire starts with what you initially offer people. It shapes your entire contract base. If your services are out of alignment with how you work, it can cause you significant problems.

The consequences of poor service alignment are:

• Selling at lower profit margins
• Achieving much lower recurring revenues and taking on more project work
• “Spiky” unpredictable revenues. (See project work above)
• Being forced to work in a way that does not suit your company
• Taking on board lots of the wrong contracts

The bonus of optimising your products and services is that it is often something that can be done for free, or with a very small budget. Investing your time and energy and seeking valuable business strategy advice on your product positioning pays dividends.

• Efficiency of your Workforce – Since the coronavirus crisis, you may have noticed that some of your staff have really risen to the challenge while others haven’t. Why is that? Take the time to reward and embed key staff within your business. Ensure that they are both financially rewarded and have the career path they desire. Closely examine how best you could use your underperforming staff members. Alternatively, consider replacing them, where possible.

• Your Market Position – More than likely you have found that your business trades at the mid-market level. This is not where you want to be.

The 3 typical market levels are:

• Premium, high-end providers – Specialists or premium products
• Mid-market offerings – Generic, what everyone else provides
• The lower end of the market – Price driven, bargain basement

Trading at mid-market level is bad because…

• It’s the most competitive market area to be in
• There tends to be lots of similar, mid-market companies offering very similar services
• It is harder to differentiate yourself from other companies
• Price then becomes a driver. With a higher cost base than your low-end competitors your profit margins become squeezed
• Lower cost producers are better able to deal with market dips and price cutting – when people are cash strapped, they seek to uncover bargains

Companies with a niche specialism tend to naturally push into the high-end market, even without a premium packaged product. This is because they can charge more for their services because they are experts within a certain area (giving them less competitors than a generic offering)

In a nutshell…premium players and lowest cost producers typically thrive. Engage with us to find out how to elevate your company’s position.

Brave new world

The good news is that if you are still reading this article, many of the issues raised will have resonated with you and you will also appreciate that there is considerable support available for you to utilise. Ridgetown has a wealth of experience that will address your new approach to driving your business.

In Challenging Economic Times:

• Strategy should not be an after-thought, but the basis of all your key business decisions. Start now!
• Picking up where you left off pre Covid19 will not be good enough. This is because previously you were trading in a buoyant economy. Your new approach must be customer centric. Your services must be delivered with a new energy and focus that your entire organisation will buy into – including your customers, suppliers and staff.
• How can we seriously be telling you to invest while you are still reeling from the aftershocks of the economic downturn? Mainly because we know it is the right thing to do and the timing is perfect. There is more funding out there than ever for businesses with a bold vision and strong strategic focus. If you doubt our assertion, let us help you unlock it.
• There will never be a better opportunity for you to address the key issue of your market share and position or optimise your product range. The recession has polarised companies into weaker and stronger positions within their respective markets. Ill prepared companies have often fallen into the graveyard of failure.
• Business mergers: Joining forces with others and working as a team helps in a survival situation. If your business is weaker, merging with a stronger company could help you thrive in a challenging marketplace. If your company is stronger, identifying businesses with which to merge or acquire that will help you move into new markets is exactly the right approach to take now. Either way, survival or growth is ensured with a stronger combined business. This is especially true where a merger is achieved with paper rather than cash.

Engage with our expert team to get a clear picture of the market before you take action. Downturns often throw up good opportunities for desert island ninjas. Clarifying the right opportunities and avoiding the many pitfalls of an economic downturn is critical to survival. Our evidence-based, finance first approach involves performing vast, in-depth market research to analyse the best possible strategies for your business.

As seasoned business experts, we have seen many different scenarios over the years including:

• Attempted mergers gone wrong due to mis-matched cultures
• Bad performance due to business under-investment
• The consequences of diversifying into the wrong product or service

As Regulated specialists, we take the time to deeply analyse your finances. We place sound financial planning at the heart of our strategic offering. Business planning in troubled times is best done by strong, experienced consultants that strengthen your core strategy to ensure improved performance.

Article was written by Philip Waxman, an experienced business growth consultant with a focus on business growth planning, business funding, mergers and acquisitions and exit strategy. Philip is an ICAEW qualified accountant. Message Philip today to talk about your best business strategy options to withstand the recession in the coming economic climate. Call 0330 223 5030 or email on [email protected]