Recessions are nasty – but they’re like any other major upset – having a plan is vital to getting through them.
There’s a lot of talk at the moment about whether there will or won’t be a recession – but there are much better things to do than:
- Worry about whether there will be a recession.
- Allow your worry to keep you thinking small and delaying business innovation “until things settle down”.
We haven’t had a really “proper” recession since the 2008-9 “great recession” – but before that, they were happening on about a 10-year cycle. So it’s not super-unlikely that there is one in the offing.
So it’s worth having a plan – and more than just a “shrink to survive” plan. Instead, have a plan that’s designed for the future – a plan to surf the waves of disruption, keeping your balance with the right combination of funding, strategy and planning.
Don’t let the negative financial undertow drag you down.
Think like the big end of town
Which is more nimble – a whale or a minnow?
The big end of town doesn’t just have more money than smaller businesses – they also think differently about money. They treat money as a commodity and use it more strategically. The best of them innovate through crises – they don’t just cut.
The good news is that – with the right advice and the right tools and processes – small business “minnows” can develop strategies and manage their money like a big business “whale” – without carrying a whole lot of weight and inflexibility.
That means that they can innovate, change direction and adapt to circumstances much more quickly than the big end of town.
In the same way that there are a far wider range of information tools for SME business today, there are ALSO far more financial tools.
Surf towards the future, don’t cut back and hope to float
In less disrupted times, it was often a useful strategy to “batten down the hatches” and wait for things to “return to normal”.
The ongoing waves of technology innovation and industrial disruption happening in the world today mean that “waiting for things to settle down” is no longer a viable strategy.
In this recent HBR article How Companies Should Invest In a Downturn these 4 strategies were discussed:
- Innovate for productivity gains rather than cut people. Explore for savings through business process improvements. “How we’ve always done this job” might no longer be adequate.
- Look for smarter technology to support your existing business processes – the right digital technology supported by the right innovation partner can make a big difference. Even in smaller businesses there are task automation and management tools that can make a difference.
- If you see talent, grab it. Your competitors might well be cutting back – so keep an eye open for good people who could add to your organisation.
- Do strategic explorations to find new value adding propositions – increased quality or a new offer.
The fundamental theme of these strategies is to invest for the future – but that leaves another question (particularly for SME enterprises).
How do you FINANCE your investment in these strategies?
This is where thinking like the big end of town financially can make a difference – looking for smarter cash flow strategies that will help you fund these changes.
The strategies are actually very similar – and in fact they can be easier for SMEs than big business whales – because SMEs are much more nimble.
The only real difference is that it’s much easier for those CFOs at the big end of town to be dispassionate and strategic – because it’s not THEIR money. That’s where expert advice from an independent Cash Flow Strategist is invaluable for SMEs.
Don’t be hobbled by your current cash flow – look for ways to enhance it. Today there are a whole range of products and services that can help you grow your business in the face of adversity.
These could be anything from engaging with a finance provider to offer your customers “buy now pay later” finance to utilising trade finance to access early payment discounts offered by your suppliers.
Failing to plan is planning to fail
We may or may not have a recession this year – but developing the core strengths to surf future waves of disruption won’t hurt your business – and could well grow it.
They could certainly help you be more nimble and responsive to your customers’ needs.
If you have recession-proofing strategies that you want to action – but not the working capital to make them happen – then message me today to book your free Working Capital Strategy session.
Martin Cattach
+61 407 477 555
Discussion on working capital and funding options:
https://calendly.com/martincattach/confidential-discussion-on-working-capital-requirements
