Managing a business when economic conditions are tough
Develop an effective survival strategy
When market conditions become tough or unpredictable, revisit your business plan, as previous targets might not be achievable.
Before setting new targets, consider such factors as recent trading results and current market research/knowledge.
Your business development strategies will also have to change. If your strategies are to succeed, your goals must be realistic.
It pays to consider what you would do should certain worst-case scenarios arise, such as losing a major customer. Effective planning is the most efficient way to deal with such contingencies swiftly and decisively should they occur. Ask yourself some key 'what if?' questions. You also need to consider potential opportunities that could be presented, for example, if one of your competitors goes out of business.
You must have a clear strategy for looking after key customers and growing relationships with them, if you are to retain them. Keeping hold of existing customers is much cheaper than attracting new ones.
If your business experiences serious cashflow or funding problems, seek advice from your accountant or a professional adviser such as Business Link. Also seek guidance from your bank, which might be able to provide you with a short-term financial solution.
Read our guides: manage your customer care and identify and sell more to your most valuable customers.
Motivating employees
You also need to think about the effect tough or uncertain market conditions can have on your employees. Morale can sink quickly and feelings of anxiety can spread when people elsewhere are losing their jobs. As well as rewarding and recognising their achievements, you need to set targets and monitor their performance.
Read our guide on how to use appraisals to manage performance.
Employers need to inspire confidence in their business and encourage a teamwork ethos. It is also important that you, the owner-manager, show strong, effective leadership and that you are successful in motivating those around you.
In addition, in a challenging economic climate, investing in skills and training is critical to increasing the competitiveness of your business. The Train to Gain service provides support and independent advice for skills development for businesses in England. Some training offered through Train to Gain is subsidised. Find out about services available on the Train to Gain website - Opens in a new window.
Find out more in our guide on how to improve the performance of your staff.
NHS Credit Crunch Stressline
The Department of Health has launched the NHS Credit Crunch Stressline via NHS Direct with trained health advisers available to discuss issues and direct callers to practical help with medical or financial problems.
If you feel your worries about the credit crunch are interfering with your life, you can call the NHS Credit Crunch Stressline on Tel 0300 123 2000.
Subjects covered in this guide
- Analyse the health of your business
- Minimise cost and maximise efficiency
- Keep your cashflow healthy
- Limit the risks your business faces
- Develop an effective survival strategy
- Access sources of business support
- Checklist - key tasks when economic conditions are tough
- Here's how my business survived adverse trading conditions
- Here's how I grew my business during a recession
