Good morning, David Elliott here again. I’d just like to talk for a few minutes on the impact of the recession, because this is something that’s in everyone’s mind at the moment and particularly perhaps small companies are concerned about the implications.
So, how can I suggest things really at this stage when it’s evolving every day? Well I think there are some basic guidelines and perhaps some ideas that might be useful. First of all, the recession isn’t necessarily affecting everybody in the same way, and so it may be that your particular product will be less affected than other products might well be.
Everyone has seen a slowdown in the housing market and linkages to that are fairly obvious and also a slowdown in car sales and the implications again there of suppliers to the motor trade again are fairly obvious. But your service may be less affected or more affected. So think about whether the recession is really going to hit you now, or whether it might hit you in a few months time, and plan accordingly – and this planning shouldn’t be a knee-jerk reaction. Often companies believe that they should immediately “batten down the hatches”, stop advertising, fire their PR company, cut costs, get rid of people, suspend or delay payments and really cause chaos. That will not be helpful! Nor will a blind belief that, “Oh well, this won’t affect us, we’re not going to be troubled by this, we can see it out, we’ve done it before, we won’t have a problem.” That probably is equally foolish.
So then, inevitably, there’s something of a compromise situation. I think that the recession is going to affect everyone in some way or other. So you should be careful about future expansion plans, you should look for small gains, easy wins, and you should be really quite cautious in your approach. But also, it may well be very helpful to look at your core business proposition. In times of plenty, it’s sometimes possible to get away without clarity, simply because everything is on the up-swing. Estate agents appear to be moaning that they’ve lost tremendous amounts of business, but they probably didn’t think about the service levels that they were giving, probably didn’t think about how they were running the business in the times of plenty. So make sure that you are not in the same sort of position, review your business very, very carefully. And above all, perhaps, check three or four major features.
One is cash flow – because if interest rates are jumping all over the place and loans are more difficult to get from banks that are running scared, then check cash flow. And even the smallest company should have the facility to check cash flow on a weekly basis.
Check, also, customer satisfaction. How often do you check with your best customers whether they are happy with the service that you are delivering?
And last, or maybe, most importantly, check how your employees are feeling. Because, when the going gets tough they are the people who will bail you out. If they’re unhappy, then they’re not going to put in the extra hours, they’re not going to help the business through what could be difficult, difficult times.
Don’t panic, take it as an opportunity to reassess the company’s strengths and weaknesses, review opportunities and threats in a very realistic way and make sure that you can pay your bills and that your cash flow is healthy. I hope this helps – anybody can contact me if they would any further information.
Thank you very much.