There is a lot of focus on the UK’s growth, or lack of it. The IMF recently warned the UK is the only leading economy likely to fall into recession this year, shrinking by 0.5% over the course of the year.
For small businesses, which have faced a seemingly constant barrage of challenges for a protracted period now, recession is a scary prospect.
Indeed, a new research report that Small Business Britain did in partnership with TSB Bank, which looks closely at how small businesses can grow, found that four fifths (81 per cent) of business owners are worried about recession.
‘Recession’ is understandably a scary word, triggering much anxiety. And our research found that concerns about the economy is deterring small businesses from investing in growth, innovation and hiring new talent.
Yet recession does not have to mean the end for small businesses. The economy remains broadly the same size, with small business growth potential still to be had.
There are of course real hurdles to overcome, such as rising costs, difficulties finding staff or reduced consumer spend. Over half of small businesses (52%) state that they are experiencing challenges but pressing on anyway. That is a lot of pressure for the nation’s 5.5m small businesses, even without factoring in the 9% of businesses that are experiencing significant challenges.
Where there are real, financial challenges we must focus on practical solutions to support small businesses. However, there is clearly also a need to overcome the notional barrier of recession to small business planning and expectations. We need to help firms build confidence and optimism, despite the negative headlines, and give them tools to focus on growth and success.
Given the events of recent years, and uncertainty around the future, small businesses could be forgiven for finding this hard and craving stability. But what has become clear is that there is really no way of planning for the long term right now; each time we think a crisis is over, another has arrived. Rather than let that knock us off course, I believe we need to chart a way forward that does not see each set back as a crisis. We need to develop a way of doing business that can survive, and thrive, in economic and social instability.
Much has been made over the years about how small businesses do not like instability. With few resources and often little formal business training, it is of course hugely challenging for businesses to remain on top of every change in the world and to have a strategy for dealing with each of these scenarios.
However, this ignores the key strength of a small business: the agility that comes without the big business baggage. Small businesses have less weighty infrastructure to change when the world changes around them; they have less layers of bureaucracy to navigate to make decisions; and they have less institutional ties to previous decision making. In fact, small businesses are ideally situated to weather a financial crisis, with the right mindset and approach in place to do so.
As we head into what is likely to be a lengthy recession, it will be critically important for small businesses to not get stuck in a single way of doing business, and not to rely on a single strategy for success. Adapting, changing, listening, and learning will all be core skills to succeed. And success is absolutely both possible and predictable in this economy. Despite the technical recession, the economy is only shrinking a very small amount, meaning there is still a huge amount of spend and trade going on across the UK.
It is easy to become disheartened by the rhetoric around a downturn but changing your mindset to the idea of a recession can open opportunities to address the real issues, along with new ideas that we can’t even imagine yet.