It is easy to think there is doom and gloom in the world.
- Turmoil in the western world.
- Wars and rumours of wars
- Culture wars and community fractions
- In the UK, increasing payroll costs and unfavourable support to businesses from national and local governments only exacerbates the concern
- Tariffs wars!!!
I could go on, but reading the papers and listening to the media can have a serious impact on your outlook on life, as well as the viability of your business.
However in my dealings with business leaders, I always try and help them to concentrates NOT on newspapers and media BUT on the activities that they can control and influence.
Business Leaders Control the Controllables
So the things that as a business leader that you can control are many, and in my normal imitable way, I have outlined a few ideas to get you thinking:
You see folks, when the economic outlook is poor, UK businesses must be resilient, strategic, and adaptable to sustain and drive growth.
Here are key strategies to thrive during economic uncertainty:
1. Strengthen the Financial Resilience in the Business
- Manage Cash Flow Carefully – Reduce unnecessary expenses, negotiate better payment terms, and ensure liquidity. I always encourage business leaders to hold at least 3 months 'operating cash' for emergencies i.e. those costs that cover overheads, supply and material costs, payroll, assets, leases etc.
- Review EVERY line item profitability of products and customer relationships – Do you know which customers are profitable and not, or what products and materials are expensive or not. Data is key folks. Controlling gross margins with each and every customer will give you the means of negotiating lower margins if needed. Never negotiate in a vacuum of data.
- Supplier focus - Review EVERY supplier relationship and negotiate better prices or look at alternative products. Encourage innovation or exclusivity to give you a strong additional added value to sell on to customers. Consider outsourcing administrative tasks or even non-profitable manufacturing or service functions to improve competitiveness.
2. Focus on Customer Retention & Value (Key Step)
- Enhance Customer Experience – Offer loyalty programs, personalised services, and better after-sales support. When economic uncertainty abounds, customer heads are easily seduced. Stay close, communicate often and create long term contract deals to lock them in. Create innovative product and service solutions that your competitors do not have. And most importantly see them face to face often.
Remember, losing a customer will cost you 100x to get back. So keeping them will cost you 1x
- Competitive Pricing & Value Additions – Instead of cutting prices, add value through bundled services or improved quality. New innovative products can allow you to maintain margins but also allows the customer to benefit with lower products or services. Your supplier may be able to help you with continued supplier or lower raw materials.
- Improve Digital Presence – Use social media, email marketing, and online ads to maintain engagement with existing and new potential customers. For example, in a recession who are the companies that are advertising - many large companies (as this is the first thing that is cut from businesses budgets). These large companies (and smart ones), understand that when the recession finishes the customer will more likely choose them because their message and brand have been in their faces for several months and top of mind.
3. Invest in Innovation & Digital Transformation (the Key to a Sustainable Business)
- Adopt AI & Automation – Streamline operations and cut costs with smart technology. Use technology to also improve productivity and to reduce waste. AI can be great in an office environment in improving customer engagement and response to queries. Use it.
- Leverage Data Analytics – Folks, data is the 'new gold' that businesses need to use. Have data systems that will allow you to make faster and more accurate decisions to react to customer, competitor and any regulatory impacts that result from economic uncertainty. Use insights to optimise pricing, marketing, and customer service.
'Data' is the New Gold that Businesses need to use
4. Explore New Markets & Partnerships (Go for GROWTH)
- International Expansion – Seek opportunities in overseas markets, leveraging trade agreements. Be brave and go for it (but be clear on ring fencing the costs). But drive your business growth to other territories and markets
- Strategic Alliances – Partner with complementary businesses to share resources and customer bases. Why not partner with a competitor or license your products to someone else.
- Target Niche Markets – Is there an opportunity to pivot your product or service towards a new market? Focus on underserved or emerging segments with specialised niche offerings.
5. Invest in your People
- Your people are you biggest asset and liability - It is super important to review your staff to ensure that you have the people to cope with the challenges of the future. Identify your top talent, incentivise them (training and bonus promises) and lock them in to incentive contracts. When economic uncertainty abounds, your people will get nervous regarding their future. Locking them in encourages them on the importance that they are to the business.
- If you need to restructure do it ONCE and DEEP - If you need to make cost base reductions in the business then do it quickly and do it deep. Use this time as a means of weeding out functions and people who do not add value to new focus and skills required of the business going forward. Making the cuts deep will ensure that you are also not caught doing another redundancy round in the future. Be very clear that a second or third redundancy round will scare off your best people (as they think the company is going down). Moral is always hit at this time, so completing this process fast is so, so important.
So hopefully I have given you a kick start to focus on the things that are in your control.
Good businesses are resilient and sustainable. If you would like us to discuss some of the things above and a LOT more then please reach out on the link here.
