Managing A Small Business In A Recession

Here in the UK we had the “Pre Budget Report” yesterday. The government set out it’s plans to get small business owners to pay more tax, they increased capital gains tax by 90%. At the same time they announced the economy outlook to be weaker as expected.

The result was immediate, looking thru my log files today, I stopped at the search term listings and saw many references to “recession” in it. Next up one client asked me about “How to run his small business in a recession?” I asked him a few questions to get him to think about what to do in times of a recession:

  • What are the problems in a recession? You may get fewer orders, customers pay later, some customers go out of business – was his answer.
  • What can you do to combat those problems? Keep your fixed cost down, make sure you have reserves, keep up with your credit control, here I had to help him with most answers.

I’ve been talking about “bootstrapping” or “cost-cutting” for a long while now, with business planning as an additional tool, to combat any surprises. Going the easy route is not always the best way to run a business. For example, having to fire people because the economy is in recession is no fun for anyone and quite easy to prevent in most cases.

So even when the times are good, make sure you do bootstrap so you will survive the bad times. I think my client got the message – good on him. ST.

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