In the second of his features regarding uncertainty in the world of business, entrepreneur Piers Linney offers a few more ideas about surviving and thriving during these troublesome times.
As the effects of the pandemic and Brexit continue to unravel, and usually in a negative way, the cost of raw materials, fuel and transport continues to rise. Not only do business owners have to ponder the increasing costs of transport and travel, they don’t even know if their regular customers will be able to afford any hike in prices. And they are not even certain if these same customers have the money to continue spending as they did pre-Covid.
To make matters worse, national insurance contributions are set to rise next April, with the UK Government making this announcement in September. This means both employed and self-employed workers will face a bill that is 1.25 percentage points higher than before. Last month I offered a few tips on how to deal with this period of economic uncertainty, and here are a few more.
The businesses most affected by the Covid-19 pandemic were those with little or no digital strategy ‘ whatever the sector and whatever their size. It’s been well-documented that small UK businesses are not as productive as they should be due to their failure to adopt technology. This needs to change. Therefore, think along these lines: ‘Automate everything you can.’
This may require some serious short-term investment but in the long-term you will reap rewards. Technology will empower your business. It will allow you to sell more, reduce costs, reach new customers, hire the best talent, develop new products, improve customer experience and save time.
Use digital advances to help you build a website, or improve your existing one, as well as embrace digital marketing. Nowadays you can publicise your shop’s inventory on a global platform. Failure to do so will hand your rivals a competitive advantage.
In basic terms, embracing technology will increase the value of your business when you wish to sell. If you do not have a digital strategy, you may wake up one morning and find that your business is no longer competitive or relevant. Try to work out where technology will help, whether it’s in the administrative department, or in processing, marketing or sales. Can you automate mundane and time-consuming procedures?
With many of us now working from home, you should hire talent dependent on capability, not on locality. And use technology to communicate, so you can strengthen, relationships with HQ, customers and suppliers. Whichever way you look, its win-win-win all round.
Stay in the game:
Despite the well-publicised ‘bounce back’ we, in the UK, have lost two years of economic growth. And in 2022 we will discover the impact that the end of Furlough and other Government schemes have had on the economy. How will it affect spending, confidence, employment and the economy in general?
Yet standing still is no longer a sensible option. You remain in business and if you have simply mothballed for the past 18 months, it is unlikely to work out well in the long-term. This is because the world has continued to innovate regardless of Covid, with technology evolving while markets have remained dynamic.
Recessions are actually good for some businesses, especially if you’re a discounter. A recession is often a good time to launch or test new products. This may sound ruthless, but keep your eye on struggling competitors or suppliers that you can purchase cheaply. Stay flexible as recessions can present opportunities that require you to move quickly. If you remain alert, you may have the opportunity to increase your market share ‘whether locally, nationally or even globally.
Sales and marketing remains king:
When cash flow starts to dry up, discretionary spending is often the first to go. This may mean marketing costs, van hire, technology training. Although you certainly need to review budgets in times of a financial squeeze, never forget that business is all about building customer relationships, as well as securing sales.
Now is the time to maintain a presence and high profile. Put more effort into your social media and content marketing. Reach out to your regular loyal customers. It is far more expensive to find new customers than it is to sell to existing or even former ones. Existing customers are 60% more likely to purchase your goods than those you are trying to attract via cyberspace.
If you sell online, opt for a ‘remarketing campaign’. This means targeting users who have visited your website. Try to engage them with specific adverts based on their online habits. Take to social media to publicise events, new products and discounted sales. Digital marketing provides you with the data to avoid guesswork. Don’t rely on a contractor or agency telling you what they think maybe working or isn’t.
But if all this doesn’t work, don’t let it drag on. Make changes and try again. Too many companies waste money on ineffective campaigns, and then repeat the dose expecting a different outcome. If your marketing team or supplier can’t demonstrate an acceptable return on your investment, you definitely need to know why ‘ and soon.
Review your team, including yourself:
Nobody wants to downsize their team or make colleagues redundant. It hurts. However, you may have no choice about making changes, as the payroll usually accounts for a large percentage of the weekly or monthly outlay. As mentioned last month, you generally know who is pulling their weight and who isn’t. And you should always retain performance data on the effectiveness of your staff.
Employment laws differ from country to country, so keep on top of any changes that may occur in legislation. The success of any business depends greatly on the quality of its team. So hang on to your star performers as long as possible. Businesses often change direction. Therefore make certain your current team has what it takes to move easily with the times.
And don’t forget to look in the mirror. Do you have the skillset and experience to navigate the business through choppy waters? If not, do you personally require expert help and advice? You always need to fill the skills gap in any company, and don’t forget that your team are aware of your own strengths and weaknesses.
Understand your financing needs and options:
A healthy and well-managed cash flow is the key to surviving any economic downturn.
You may have achieved everything that I have recommended in these articles, yet there is still a need for capital.
As a former venture capital lawyer and investment banker, with experience in London and New York, I know that raising finance takes time, through detailed preparation and planning. But if raising finance is new to you, then you may need to seek professional guidance.
If you need to raise finance, it is vital to start investigating immediately, while also understanding all financing options which are available. These options will depend on many things, such as sector, size of business, stage of growth, financial performance, growth potential and even location.
If you already know that an existing loan is going to be hard to service, please don’t ignore it. Speak to your lenders, as it may be possible to restructure the loan agreement. Maybe even seek a payment holiday. You may be able to reduce the monthly cost, although this will mean you will have to pay a greater overall amount.
If you need to raise equity, speak to existing shareholders first and share the plan. Finally, track key performance indicators more closely than ever. Make certain you will not be surprised if you hit a financial wall, because this makes it easier to predict problems and gives you much more time to secure new finance.
Remain calm and execute:
Work through the issues systematically and develop a plan (as recommended last month). One thing is definite, in that this won’t be the last period of economic uncertainty you will face. In times such as these, we all learn about the weaknesses in our business. It is always possible to come out the other side, stronger, leaner and more profitable, especially if your competitors are unaware of my recommendations.
You can receive Piers’s weekly letter and free access to his 10 hour video course at http://www.moblox.com