How To Thrive In A Recession
On the 29th November, hgkc held their first roundtable in person since the pandemic. Located at Square Works Bristol the discussion focused on the upcoming recession and how the attendees could overcome the challenges they faced due to the crisis in Ukraine, Brexit and COVID-19.
hgkc Director and co-founder Peter Quintana facilitated the event and was joined by guest speakers Paul Netto, founder of visionary accountancy practice Equifino, Sam Talby, insolvency practitioner from Undebt, and Kim Jones, hgkc Director, co-founder, and innovation expert.
Currently, Britain has 1.3 million more vacancies than the number of people looking for a job, and recruitment was agreed as a common struggle. Unexpected departures and adjusting to hybrid working continue to present challenges, and whilst some found three days in the office worked best when it comes to retention, employees have missed collaborating and being around people, and businesses continue to struggle to develop effective hybrid working strategies.
Despite this, Peter advised that you don’t need to hunker down and cut costs when facing a crisis, you can thrive instead by investing in your brand and focusing on innovation in your core areas of expertise.
First, though, it is critical to make sure your business is based on a secure financial foundation.
Inflation is currently at its highest in 40 years, hitting 11.1% in October. Paul Netto spoke about the importance of understanding your figures as they do not lie. It is imperative that your business has cashflow as it really is king. If your cash is tied up, you won’t be as flexible as you need to be. He said how now is the time to concentrate, the pandemic distracted businesses and some are ignoring the signs of the recession.
Paul asked three key questions:
- What can you exploit?
- Can you utilize the space in a different way than you are?
- Can you diversify what you are doing?
He advised that you should look at what your competitors have done and that you should not only to think about creditor terms and payment times but talk with your customers and suppliers as well. Are they struggling too? Will they help you (e.g. suppliers may extend payments if you have a strong relationship with them)?
Paul said that you should build up your cash reserves and always plan for a recession even when times are good, as often we do not know when things will go wrong. If you are wanting to cut costs, understand what your biggest purchases are and research whether you have any other options.
Sam Talby pointed out that you can subscribe to sites that look at crown court judgements allowing you to get a view of what those you do business with are doing. It is common for people to lie under stress and you as a business need to know how to protect yourself. Nimbla was recommended as a company that allows you to insure your invoices and protect yourself when taking on new clients, and Credit Safe was advised for credit checks. Both platforms include international companies as well.
Sam went on to talk about how owners need to understand their company as they will need to state a case that bankers will accept when looking at getting funding. They also need to look for the opportunity to diversify and invest.
When entering a recession, marketing is always one of the first to go. We at hgkc believe this to be a mistake, but why should you protect your marketing spend?
The primary reason is – as Kim Jones pointed out - is that businesses that have invested in their brand come out the other end of a recession stronger.
Kim went on to say that this is the first data driven recession. In the past we didn’t know what marketing worked, but now we know more than we ever have before. We need to be more critical about our spending, analyse what works and what doesn’t, and we have all the data we need at our finger-tips to help us to do this. However, it is important to have the money to focus our marketing. Those that don’t have enough cash reserves need to be extra careful about where they spend.
It is important to keep your brand lively as this is what customers and prospects will be looking for. Ailsa Billington, Managing Director of Proctors and Stevenson Creative, stated that P+S focus on intent marketing – finding out where prospects are looking, who they’re following, who’s following them and when they are ready to buy.
You also need to be aware of any market changes pre/post crisis as the better you know your market the better you can target your messaging.
The discussion moved on to talking about customers and how we build and maintain relationships with them, during and after a crisis.
All agreed that if you are offering deals to new customers, the same or similar offers should be applied to existing customers, otherwise, they may feel forgotten or not valued. When facing challenges, you need to be upfront and honest with your customers. Reassure them that everything is going to be okay and make sure you don’t scare them off. Keep yourself in control.
Ensure that more than one person has a strong relationship with customers. This helps to minimise the impact of staff changes, employees leaving, and leaders exiting. Your customers need to feel a strong emotional connection to your brand and your people. The stories you tell, sharing your values, and the impact you have on your local and wider community all play a part in building strong relationships. Remember it is people who are buying, and they need to trust you and feel valued.
You should not only build strong connections with your customers, but when you’re marketing remember your suppliers and funders. Ensure that they understand your ethics and share your beliefs.
Since the COVID-19 pandemic, we have become so used to working online and connecting remotely that we risk forgetting the impact and value of meeting in person. ‘Zoom/Teams fatigue’ is common and making the effort to visit your suppliers or meet your customers face to face could help to seal the deal. It also helps to build strong connections and develop trust. Andy Farmer, founder of MyOxygen, discussed how important a face-to-face meeting was and even though it may take longer, seeing visual and unconscious cues that you may miss when talking remotely – changes in body language, for example, or the level of activity going on around you - will give you a better understanding of their current situation and their needs.
The conversation grows, changes, and touches on so many different topics. If you were just speaking online, people tend to go on to a call with a point, and that’s it. There is no room for movement or getting to know your prospects better. All emotional connection is lost.
Training Your Staff
Chris Barrell, co-founder of Open24Seven, asked how do you get the most out of staff? How do you utilise new tech and automation to free up staff to do the important things, such as building these strong relationships? Your people need to have the time to focus on adding a personal touch and learning as much as they can about your prospects, who they are, what they want, what problems they need solving.
This can be particularly challenging when hiring the younger generations, who are more averse to picking up the phone and making a call. People are now growing up with fast technology and being able to access things quickly. As Jenny Holmes, Finance Director of Okko Health noted, they don’t want to waste time by making a call when they can send a message digitally. Even more so, younger prospects won’t want to pick up the phone.
Business leaders need to provide training opportunities for their people to help them build stronger relationships. It was agreed that it is the employer’s responsibility to train their people to represent the brand and its values.
Along with marketing, training programmes are generally the first cuts to be made when it comes to a recession. It is important that your people are invested in, this doesn’t only help them to deliver your brand, but provides them opportunities to develop themselves as well as helping to ensure that they stay within your organisation.
When facing a recession, business leaders need to focus the majority of their time (around 70%) on the core of the business and what it is doing now, 20% on the next generation of products or services, and 10% on blue sky. You have to understand the tools and technology that you need to achieve your goals and train your staff how to best represent your business. Ensure you limit and monitor the amount of products you are developing or the projects you are working on. Focus on what will have the biggest impact and devote your time to that.
Attendees found the roundtable thought provoking. As Imogen Waite, founder of Season and Taste said, ‘there is no normal’.
Despite that, at hgkc, we believe we need to adapt and innovate to be successful no matter what.
If you are interested in joining hgkc for our next roundtable, we will be running more in 2023, get in touch if you have questions and keep an eye on our LinkedIn and Eventbrite for further updates on future roundtables.
‘Great to get out and have stimulating discussion with other business owners.’