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Switch on the TV news or open any good newspaper and there it is - the R word. Nobody wants a recession and anyone guilty of talking business down into a hole deserves to suffer alone. Equally we have to be grown-up. We can't bury our heads in the sand and pretend that the doom-sayers are all entirely wrong.
As ever, an hour's planning is worth a day's battle. The businesses which put in some hard graft and make tough decisions now will be the ones which don't face a potential crisis in six to 12 months time. Indeed, they will be able to prosper if recession does strike. For the record, not everyone thinks it will happen. Peter Jones of Dragon's Den fame says not. Sir Alan Sugar isn't in the doom camp either.
What's more, much of the preparation has virtuous benefits regardless of a recession. Making yourself leaner and meaner, less wasteful of sales opportunities and tighter on expenditure will feed black ink onto the balance sheet in any economic environment. It also has the side effect of making your business greener and that has commercial value.
Now is the time to ask yourself, do you squeeze every ounce out of every sales enquiry? In good times people can and do develop desperately lazy habits. They've got so many sales leads they only really develop the hot ones and the easy ones. This needs putting right anyway, but especially so if enquiries are going to dry up. Tighten up on your response structures and internal reporting.
Losing a sale through being inaccessible or slow off the mark is bad enough but losing a customer that way is inexcusable. Over the past six years mobile e-mail has proven its business case, but the stubbornly high price of market-leader "BlackBerry" is holding back mass deployment. However, a more cost effective solution is available caled "OpenHand", which offers additional functionality compared to the BlackBerry for around half the price. It has a fully hosted version for those companies who do not run their own Exchange or Lotus Notes servers.
OpenHand's commercial deal is good: no minimum contract; compatible with over 300 existing handsets; average data transmission cost around £3.00 per month; and no upfront license fee. Many companies now run BlackBerry for the executive user and OpenHand for the rest of the revenue producing team. Download a free trial at www.openhand-mobile.com .
A classic error made by many businesses in the last two recessions was to cut their advertising and marketing budgets. This is madness. If enquiries are harder to come by, your marketing needs to work harder than ever, not be put out to grass. This happens because it's an easy target. Instead, look at where the money is getting spent with what results. I know of businesses that take an ad in their local paper every week "because it's good PR". Enquiries? Forget it! Take that money and put it into activities that generate response.
Look hard at what you're offering. People become more price conscious in a downturn and may need pistol hot finance or leasing deals. Promoting your bargain basement product may not be your plan but it's better to have more low price sales than to see the quality end fall off a cliff. Promotional offers - free add-ons as a case - help turn ‘maybe' into ‘yes'.
How good is your cashflow management? Most businesses could improve in this area. Just doing the basics better will help enormously. Agree payment terms at the outset and don't assume that 30 days credit is essential. Invoice every job on delivery, not at the end of the month (know when the dreaded cheque run happens, too). Chase non-payment by phone on the due date; don't just send out a statement. Talk through late payment with customers - your actual contact may be unaware how badly his accounts department is treating you.
Where do you cut costs? Start with those utility bills. If you haven't checked out the market there are savings to be had by buying gas and electricity from another provider. Talk to BT about where you can make savings on your land lines. Is your mobile phone provider giving you the best deal? These are cost savings which all staff can recognise as valuable and sensible.
Vehicles are often a problem area for cost-cutters. There is no magic answer to the conundrum between purchase, lease and contract rental, so start comparing well in advance of need. Downscaling your vehicles is superficially excellent cost consciousness. Unfortunately, it also sends out a very negative message to staff and customers unless handled with great care. It needs to be done top down with plenty of consultation.
You need to tell and sell your sharp eye on costs. Staff can get very jittery when they see savings being sought. Am I next? is a natural reaction. I'd suggest that the tone to take is that if the Governor of the Bank of England doesn't know if there's going to be a recession, you certainly don't but you want to put defensive measures in place now. Far from their jobs being at risk, you're doing your best to ensure they're not, therefore will everyone join in, please. Remember that nobody under 30 (make that 35 for graduates) has worked in a recession so they don't have experience of the problems.
Audio visual products have been with us for quite a while but with oil now tipped to reach $200 per barrel and a £2 litre worryingly possible, Audio Visual meetings where all participants remain in their office (or at home) offer significant cost savings as well has helping the environment.
In the past, companies have had quite expensive set up costs, but as IT for business moves inexorably towards a "hosted" environment where the hardware is provided off site, set up costs are significantly reduced.
Audio visual facilities also help those people who find it hard to work from home, even for a couple of days per week. The visual contact helps keep the impetus and morale high and also helps managers keep an eye on standards and activity levels.
With hosted costs at less than £15 per person per month it doesn't take a complex calculation to see a substantial return on investment. A business contact cited a recent experience travelling to London from the Midlands for a one hour meeting taking five hours of driving, £50 of diesel and £18 to park.
Cutting travel expenses and time-wasting within a business is beneficial, but there's more. You could provide this to regular customers. £15 per month each is a small price to be able to communicate face to face with your most important, regular customers. This is more significant still where you have export customers, or deal with UK based multi-nationals. In all cases it would enhance the relationship and help ring-fence them against hungry competitors.
AV has been struggling for a foothold in the UK for a while now, but the tough economy, very affordable pricing, home working and green issues now make this a must for business. For the full story look at www.avistar.com
Hosted IP Telephony or VOIP has long been touted as the way ahead, but don't necessarily regard this as saving money on your calls. Most companies will have to substantially bolster their broadband connectivity to make it feasible which, along with monthly charges for each person, will generally cost you more than current call costs, unless you make a significant number of international calls to other VOIP users. Try www.gammatelecom.com or your local telephony professionals.
So why bother? The functionality provided will increase the efficiency of your business and allow you to get the most from your staff. Calls can be put through seamlessly to home workers as if they were in the office, indeed if the office is busy your home workers can even answer calls as if they were the switchboard, not just from home but from anywhere in the world with suitable connectivity. This could mean you don't need anything like the office space you currently have. Imagine putting that saving into your bottom line!
Hosted IP Telephony gives the smaller business amazing flexibility and instant reporting on employee status known as "presence" - an on screen menu shows if they are available, on the phone and the user can also advise if they are unavailable for any period of time. In short, generally you will not save money compared to existing call costs but you will get improved productivity creating greater savings. It also provides significant flexibility both in terms of staff location and the ability to take the entire set up with your existing numbers should your business relocate.
So you see, preparing for a possible recession doesn't have to mean doom and gloom and expecting the worst doesn't mean it will actually happen. In many cases, the changes suggested here simply make good business sense.
Paul Clapham is a marketing consultant with over 25 years' experience covering a broad range of business sectors and a full spread of marketing disciplines. He runs his own business, working with small, medium and large companies alike to increase their profitability through marketing. Tel:01453 765432
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