With news of a recession looming and the cost of living rising, many business owners are feeling panicked. Instead, take some nice deep breaths and read this positive, reassuring piece by Sarah Matthews, with tips from the experts…
Words: Sarah Matthews
In a world that equates hard work with busyness, it can feel scary when things start to slow down. And when you’re bombarded with headlines about the economic crisis, inflation and a recession, it’s natural to worry about the future.
So how can you overcome the fear and continue enjoying your business this winter? The key is all about balance, says business coach Colette Broomhead.
“Firstly, don’t buy into the hype,” she says. “Lockdown was a really good example of this. Suddenly all the talk was ‘small businesses are doomed, it’s all going to be awful’ and it can be very easy to get dragged along with this type of thinking without really questioning it.
“Likewise, don’t bury your head in the sand. It can be tempting to go to the other extreme and think it’ll be fine and carry on as if nothing’s happening, but that’s not particularly helpful either.”
She advises taking time now to get to grips with what’s happening inside your business. Work out what success means for you, have metrics you can measure – things like audience growth, sales, revenue – and keep a regular check on them. That way you know whether things really are slowing down and where you might need to make changes.
“It can be very easy to blame outside things, like a recession, but sometimes the issues might be things within your business that can be quite easily fixed,” she says.
And if the quiet times do come? The key message is DON’T PANIC.
The businesses that survive the bumpy times are often the ones that lean into them, rather than pulling back.
Business strategist Anna Lundberg explains: “There’s a tendency, when you’re afraid, to suddenly think you should be doing something differently, or even start scatter-gun applying for jobs that you don’t really want, but this pulling back makes your failure inevitable.
“You’re taking your eye off the end goal and might be changing something that would’ve worked had you stuck with it a bit longer.”
She advises looking at your planning and processes now so that if quieter times do hit you can feel more confident in riding them out.
“It can help you feel less panicked because you know you’re taking the right actions. You can be assured you’re doing everything you should be doing.”
Her other key takeaway? Work not just on the resilience of your business but your own personal resilience too.
“When things are out of our control there is an element of acceptance that needs to happen. You can scream and fight and think it’s unfair, but the most important thing is to focus on the things that you can control – like sleep, eating well, exercise, connection with others. These can all help you to stay strong.
“They’re often the first things to go in tough times, but they’re actually the things we need the most.”
Surrendering to a slower pace and taking the time to nourish yourself can have a positive effect on your business, forcing you to step back and look more objectively at what’s working for you – or not.
Maybe you’ll start a new creative project like the podcast you’ve been putting on the backburner for so long, rekindle a love for an old hobby, or have more time to connect with friends.
Wellbeing coach Lisa Swiatek’s work focuses on the lessons we can learn from the cyclical nature of the seasons. She believes businesses have their own spring, summer, autumn and winter each year, and there are certain types of activities that should be carried out in each one.
While a recession may be something of an enforced ‘winter’, she says it’s not something to be feared.
“We don’t often get a chance to pause and reflect, and this is that time. Think about what nature does in winter. It’s a time for going inwards, not being as visible and loud – a slower, more gentle checking in with yourself.
“If you’re not spending as much time on your business, what are the things can you do to refill your cup so that when it gets busier again you’re starting from a really good place of being nourished and well rested?
“Remember, nothing in nature blooms all year, and we’re not supposed to either.”
Recession-proofing your finances
So, you’ve dealt with the mindset stuff but what about your finances?
Money mentor Aleksandra Kohut shares her top tips for keeping things under control in a downturn:
- Know your numbers: Work out the key numbers you want to track – no more than five These will vary for everyone but are likely to include things like profit and turnover. Learn the story behind them. Numbers themselves mean nothing unless you know why something is the way it is.
- Keep your books are up to date: You can’t make informed business decisions without knowing the current picture.
- Watch out for ‘money leaks’: Is money escaping your business without you realising?Check all your direct debits on a quarterly basis.
- Don’t stop spending on the things you need: Be smart with your money, don’t overspend, but at the same time make decisions that are right for your business.
- Accept that some investment may be needed to grow.
- Increase your prices: People are so scared to do this but prices should be increased every quarter, every six months at the very least.
- Cash flow forecast: Create a weekly cash flow forecast for the next quarter. It’s like a crystal ball that gives you visibility of what’s coming down the line.
- Build a cash buffer: Ideally between 3-6 months of operating expenses. If this isn’t possible start saving something – even £10 a week is worth it because it builds a habit.
- Don’t put all your eggs in one basket – if you have one client that brings in the bulk of your income look to diversify. How could you protect yourself if they went bust?