8 business owners share the tried and tested tips that helped them survive a recession
From risk-assessments to a laser-focus on delivering customer excellence. These business owners have survived past recessions and are sharing their lessons…
The cost of living crisis, energy price increases and political disruption – it’s impossible not to feel anxious about another recession – particularly as a small business owner.
We caught up with eight entrepreneurs who have weathered the storm in previous recessions, to find out what lessons they learned and what tips they can share with fellow business owners who might be facing a recession for the first time.
Laura Weaving, Founder and MD at Duo Global Consulting
What lessons did you learn as a business owner surviving a recession?
The first lesson is managing your mindset. There are so many examples of businesses that have flourished during recessions, but our automatic thought tends to be recession = losing business. Instead, switch your mindset to spot potential opportunities. Don’t let fear or potential negatives overtake you.
The second, and biggest lesson for me, was creating a business model that has recurring revenue, meaning you are less likely to lose a big chunk of business over night.
What tips do you have for business owners facing a recession for the first time?
Take a step back and look at where your revenue comes from – it is from diverse sources? Are there ways to make your service a product too? Where could you create longer term partnerships with recurring revenue? The more diversified you are, the less likely your whole revenue will be impacted.
Also, keep your mindset in check – it has the potential to do way more damage than any recession will!
Louise Kennedy, founder and Director At Oculus HR
What lessons did you learn as a business owner surviving a recession?
Importantly, focus on your clients and don’t lose sight of delivering an outstanding service. Offer support where possible – remember other business owners will be going though similar challenges to you.
Protect your cashflow to ensure you can cover your costs. If not, it’s time to start deciding which cutbacks need to be made.
Evaluate your internal processes and actions – can they be more effective and efficient? Consider which processes positively impact the business and adapt any that don’t.
And finally, consider if there any ways to diversify your business, to expand your offering and widen your marketplace.
What tips do you have for business owners facing a recession for the first time?
- Look after your money.
- Keep the business operating, as long as it is viable and can breakeven.
- Continue to market your services, keep pushing for growth.
- Try to plan and take action; don’t wait and worry.
Sarah Pittendrigh, Founder, CEO & Franchisor at Simply Bows and Chair Covers, and mindset and business coach
What lessons did you learn as a business owner about surviving a recession?
I learnt not to let panic creep in and cloud judgment, as this can lead to making costly knee jerk decisions. Panic and negativity can also send fear through your team, customers and suppliers; instead, adapting a growth mindset positively influences your outcomes.
What tips do you have for business owners facing a recession for the first time?
Carry out a “risk assessment”. What is the breakeven point of your business, where do you have to be each month to trade comfortably?
Plan ahead and think strategically. Take a step back and look at how the business can be strengthened or if you need to pivot.
Look at ways of cutting costs, but equally look for opportunities. Involve your team in this, have they got any innovative ideas to help the business reduce costs and increase profit? Think of innovative marketing campaigns on social media – it is free!
Think carefully before making redundancies – training staff is costly and good people are incredibly hard to replace.
Matt Jones, CEO at Rebel Lion Advertising
What lessons did you learn as a business owner surviving a recession?
Trying is always better than not trying. If your business is based on a solid idea that excites you, then you must continue trying.
What’s more, in a downturn, bigger businesses often struggle and need to make major cost cuts, including redundancies. Smaller businesses often have an advantage because they can be agile and resourceful.
What tips do you have for business owners facing a recession for the first time?
To have the best chance of getting through tricky stages, you need to be able to live on a lean income. So, factor this into your planning.
Don’t neglect important things like your culture. Continue to work with staff and clients who energise you.
It can feel lonely running a business in tough times. Surround yourself with people who understand. They will be invaluable on the hard days and be your biggest cheerleaders when you’re through the other side. Success allows you to dictate your own future, so let this drive and motivate you.
Kari Owers, Founder / CEO at O.Agency
What lessons did you learn as a business owner surviving a recession?
The recession of 2008 came just as our new business was getting into its stride so the lessons we learned then have stood us in good stead for the rest of our business journey, and helped especially during the recent pandemic.
The most important lesson I learned as a less experienced business owner back in 2008 was the importance of communication to your team when something like a recession hits. Everyone needs to understand where the business is and feel involved. Whilst people need to know when they are safe and secure, they also need the facts on company performance so they understand how they can help the business – once people know where they can help you in any way, they generally do. Communication is key.
What tips do you have for business owners facing a recession for the first time?
Understanding your numbers is my first tip; I learned fast how to read the P&L inside out and back to front during that first recession, which has helped us plan better for unforeseen events – as soon as the pandemic hit we were able to do a swift risk assessment and quickly give our staff confidence that we could ride out the storm.
I would say to any entrepreneur that recessions can also come with opportunity, in 2008 we were small and nimble enough to spot that social media was taking off and focus on research and development (R&D) so that became a service line before many of our competitors – that pivot helped see us through that year and became a big part of what we do today.
Ben Quigley, Executive Chair at Different Narrative
What lessons did you learn as a business owner surviving a recession?
In recession it’s key to focus tightly on core business activities and cut out all other distractions.
What tips do you have for business owners facing a recession for the first time?
- Identify what you’re best at doing and deliver an excellent experience consistently to ensure your customers are getting great value for money – better, faster, cheaper – than ever before. Be clear about what you do and stay laser-focused.
- Reducing costs is a priority of course but don’t fall into the axe trap – to reduce staff costs, look to reduce hours first before losing jobs. Don’t lose valuable talent, it’s your most important asset.
- Don’t go dark with marketing – if you need to save money, trim marketing budgets, don’t axe them altogether. Businesses that maintain visibility stay strong in recession and emerge stronger out of them!
Veronica Swindale, The North East Sales and Marketing Academy
What lessons did you learn as a business owner surviving a recession?
Communication is key. With all employees, through your customer base and with suppliers, including your bank and landlord. HAVE CONVERSATIONS. This helps you to manage expectations when services need to be adapted to fit the economic climate. It also makes it easier when you come out the other side and money is more available.
Test the potential demand for your business offering before investing. Always check the potential return on any marketing investment, otherwise don’t do it. Companies can waste too much money on non-targeted marketing activity generally.
What tips do you have for business owners facing a recession for the first time?
It’s important to focus on what’s important to your business. Make sure that everyone in the business is productive and everything that is being done contributes to the bottom line. You may have to make some hard decisions. This is about economic sustainability first and foremost.
Therefore, it’s important to understand your numbers. What potential business is in the pipeline, the value of your current business, who owes you money and how much you owe to your suppliers. How long can the business survive in the current climate? Examine every element of your P & L to see where waste can be reduced.
Remember not every sector is impacted by the recession so think that through too.
Finally, Karl Mitchell at at IT Cent.re has a tip on payment terms to help with cash flow…
It might sound cynical but don’t let people exploit payment terms when they are bigger than you. Embrace automation for things that can be done well and analyse spending on existing recurring subscriptions- these micro-spends add up to big recurring liabilities. This will allow you to remain agile and give you a better chance of survival.
Keep Updated
Sign up to receive HLN straight to your inbox, for free, twice a week.