Four hacks to survive economic challenges as a small business

It’s not hard to understand why many small business owners are filled with trepidation when the economy slumps or if they’re faced with unexpected challenges.

A global fuel crisis, rising inflation or labour shortages are just a few worrying factors that can lead to a drop in business confidence.

Small business is the backbone of the UK economy, making up most of the private sector and providing over 60% of total employment in the UK.

But the British Chambers of Commerce’s latest Quarterly Economic Survey reported that one in three firms were reporting a decrease in cash flow and 24% reporting a decrease in domestic sales.

This has led some businesses to go into crisis mode, cutting back on costs where possible, freezing recruitment and generally ‘lying low’ while they wait for the situation to improve.

But while it is clear that times are tough, research by Vodafone showed that despite the challenges ahead a significant number of small businesses remain optimistic. The survey of 1,000 small businesses found that 43% expected their organisation to grow this year. And 30% of business owners explained that the financial difficulties they faced had forced them to innovate and change the way they operate.

So what action can you take to ensure your business gets through a challenging period unscathed? It’s never a bad idea to draw up a business survival strategy. Taking stock of your current situation and making preparations for trickier times will not only help to weather the storm but will help shore up your business in the long term, too.

Small businesses may not be able to impact the outcome of national - and global - events. but by taking action to protect their livelihoods, they may find they are not just able to survive but actually thrive.

Read on for the survival hacks that could safeguard your business.

1) Cut costs

At a time when every penny counts, simple, common-sense steps to reduce costs can really help improve the bottom line for small businesses. The start of the year is a great time to examine your spending and practices, and to work out where you can make savings.

Consider whether you could reduce overheads by switching to a smaller office or joining one of the 24 designated UK Enterprise Zones, which offer business rates discounts of up to 100% for firms that operate within the zones.

You could also look into coworking spaces, which offer hot desking and great networking opportunities for start-ups and entrepreneurs.

Other ways to cut costs include: shopping around for the best deals from suppliers, insurance companies, broadband providers and mobile phone contractors; streamlining your marketing, and reducing travel costs through virtual meetings and home working.

2) Invest in your staff

This may not be the time to spend on professional development such as sending staff to training and conferences, but focusing on areas such as health and wellbeing can be a way to boost productivity and loyalty.

It may also help you to cut back on the cost of absences through illness. Research shows that absenteeism costs businesses more than £550 per employee per year and 70% of small businesses say staff absences are affecting profitability.

The main causes of absence are minor illnesses and mental health issues, which demonstrates the potential benefits of employee wellness schemes and wellness action plans that support employees to improve their mental health at work.

Absences could also reflect inflexible work practices and other issues. Offering the opportunity to work from home as well as from the office, aka hybrid working, is seen as a perk by many employees as it allows for improved work-life balance and caring commitments. In addition, hybrid working is also proven to boost productivity and collaboration and cut down on workplace overheads - saving an average of £4,000 a month in rent for businesses that employ 50 people or fewer.

Where it is essential for staff to be in the office, it is important to minimise the likelihood of seasonal colds, flu and of course Covid spreading. Good workplace hygiene - from cleaning equipment to washing hands - can help, along with providing employees with lateral flow tests and encouraging those with Covid symptoms to test before coming to work.

3) Prioritise your customers

Much like investing in your staff, there are obvious benefits to retaining customers when you are not able to spend on attracting new ones. While it may not be possible to avoid passing rising costs on to your clients, think about other ways you could make them feel valued and supported.

This could include loyalty discount schemes, cashback rewards or offering payment by instalment to help them spread the cost of buying. Such schemes also offer the added benefit of providing valuable data on buying habits which can then be used to improve your marketing strategy.

Make sure you keep on top of marketing, whether through social media, newsletters or local SEO, to ensure your customers are aware of what you are doing and how you can continue to help them. And don’t overlook the importance of great customer service.

Bad customer service loses UK businesses up to £12b every year, but ensuring every customer has a good experience and any complaint is dealt with satisfactorily can boost customer loyalty, the amount they spend with your business and your profile.

4) Find out what help is available

There is a variety of support available to help small businesses get through the challenges of the coming months. The government’s Energy Bill Relief Scheme, unveiled in September 2022, provides a discount on the unit price of gas and electricity for anyone on a non-domestic contract. Local councils also offer small business support funding to eligible companies, including sustainable business growth grants. You could also research the support currently on offer to businesses from charities.

If you feel your business could benefit from the advice of an expert, there is a range of mentoring and online support available to help SME business leaders improve the performance of their businesses.

Coach and mentor Anne Beth Jordan explains that a mentor can act as a sounding board when we are feeling anxious or uncertain, provide an external and independent perspective on decision-making and use their lived experience to offer guidance and advice.

Looking for more advice and support? Connect with Chloe today.

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