How can I protect my business from the shrinking economy?

Creating a resilient business should be on every managing director’s list, but it’s never been more important than right now, with the economy shrinking, the cost of living biting, and inflation in double-digits meaning everything costs more. So what can you do to protect your business in the current circumstances? Here, Parsons director and head of our York office, Mark Stanton, gives his advice.

Expert, bespoke advice could be of use at this time, but it may be perfectly possible to assess and improve your situation independently with a little guidance. So before you pay for any specialist support, take a look at the following tips.

Tips for maintaining business resilience in a shrinking economy

A majority of the following advice is focused on reviewing, renegotiating and retention. These are some simple steps you can take towards building resilience in your business:

1. Review expenditure – first of all you need to make sure all your records are up-to-date, so you can get a real-time view of your position. Look at where you’re spending and how much. A quick audit of your expenses will help with a lot of the following points.
2. Minimise unnecessary expenses – now you have a clear view of your expenditure and allocation, see if there’s anything you can remove or reduce. That weekly fruit basket delivery for the office that nobody eats? Get rid of it. A retainer for a service you barely use? Re-negotiate it.
3. Review your debtors list and, if appropriate, chase any overdue invoices – assign responsibility for this to one individual within your team to maintain focus on your income, and ensure that your relationships with your more profitable clients are solid. It’s good practice to check some key performance indicators each week to track this, such as sales leads generated, conversions fulfilled, cash balance, stock turnover, debtor days, and gross and net profit.
4. Review essential costs and suppliers – there are some things you can’t do without. Such as electricity. But as one of the biggest culprits in regards to this cost of living situation we find ourselves in, this is the ideal place to start. Are you due a tariff shift? Is there a cheaper (and maybe even greener) alternative? It’s worth referring to trusted sources for specific advice, but definitely take a look at these overheads quickly, as every saving soon adds up.
5. Discuss finance/payment plans – if you’re struggling to keep on top of any business debts or your customers are also squeezed and subsequently slower to pay,  pressure increases on your cash flow. It’s time to have a chat with your suppliers to see if you can renew your terms: spreading costs, reducing payments or being given a little more flexibility on payment timescales can all help to protect your business in tighter times.
6. Review staffing costs – this one is likely to be the most emotive, as your staff have likely helped carry you through some tough times in the past. That said, if your business is being hit hard by the economic climate, it doesn’t hurt to look at your current structure to see if you’re wasting resources anywhere.
7. Review your portfolio – not all of your products or services will be equal in terms of profit potential. Is there anything that costs as much to deliver as it earns? If there’s something dragging your overall financial performance down, it’s time to let it go. You can seek another trusted supplier to pass on any ancillary services if that’s a feasible option; you could even negotiate a commission on leads.
8. Retain your talent – employees on the tools, in the office and on the road who know your business almost as well as you do are valuable assets. They’re part of the machine that generates your profits, and losing them can be costly in terms of recruitment, a pause in productivity and time invested in training. Keep communicating with your team, be honest about any cutbacks you may have to make and ensure they feel valued so they stay exactly where you need them – in your business.

If you require some personalised advice or support to review your status quo and seek-out the potential for savings, please contact us and we will be happy to guide you.