A recession is on the horizon. Some economists such as David Blanchflower have even compared 2019 to pre-banking crash 2008. It’s time to get your facts straight, find out what to expect, and get ready to safeguard your business against financial turmoil!
What are the factors that are leading to a global recession?
- Weaker growth in both advanced and developing countries (as warned by the UN)
- Trade wars between US and China.
- Currency fluctuations.
- Uncertainty surrounding Brexit.
What will the repercussions be?
- The UK’s economy will inevitably be damaged by the global landscape.
- The UK will be on the receiving end of the economic repercussions of the US trade war with China.
- The uncertainty caused by Brexit will create a hesitant consumer base in the UK.
- The prospect of no-deal Brexit — leaving the EU with no deal will plunge the UK into its first recession in a decade (according to David Blanchflower)
- global growth will fall from 3% in 2018 to 2.3% this year – its weakest since the 1.7% contraction in 2009.
- Rising levels of debt and a “global downturn that could increase unemployment and inequality”.
- Redundancies and a decline in job vacancies on an international basis.
- A rise in unemployment.
How can you prepare your business?
Despite uncertainty, there are ways to prepare your business for an imminent recession. Here are some key strategies that will help your business face economic turmoil:
- Focus on existing customers — It is essential that you focus on your existing customer base during testing financial times. This will increase brand loyalty and grow customer confidence. Offer them benefits and reasons to stay true to your brand.
- Put some adjacency strategies in motion —find an area adjacent to your core product or services to expand into.
- Develop extension strategies — take your current service a little further and offer new and exciting opportunities or products to existing customers. Ensure that you have a flexed forecast so that the business is fully prepared for all possible outcomes of this new strategy.
- Forge some powerful alliances — mergers, acquisitions, and alliances are all key strategies during a recession. Alliances offer a great way to expand your business without investing in anything completely new during times of uncertainty.
- Don’t be afraid to outsource — outsourcing key elements of your business can save you time, money, and financial anxiety during a recession. Outsourcing your accounts department may allow you create scale and flexibility within your organisation and help with factors such as managing your small business VAT.
- Reduce inventory costs — look to see if your business has the leeway to reduce costs without sacrificing the quality of the services or products it provides. This will help to take the pressure off your finances.
- Don’t sacrifice your marketing budget — often, brands make cuts to their marketing budgets in response to financial anxiety. However, this will spell disaster for your company. There is no time more crucial to maintain your marketing efforts and show customers that your brand is tackling the recession and winning.
- Tighten up on your corporate governance – companies that see a downturn in performance are more likely to survive if they have good corporate governance embedded into their culture.