The recession has had a long-term impact on consumer attitudes and behaviours. One lasting change is that more than half of consumers express a preference for businesses that are local or are seen to be an integral part of their community.
That’s potentially good news for SMEs but what other post-recession attitudes and behaviours will impact on small firms?
One thing’s clear, consumers are now more cautious than ever and they find it hard to share the optimism of many economists. Recent research by ID Insight Consulting has found that fewer than one in three people agree that the economy is out of recession and growing. More than two-thirds believe the economic outlook is uncertain and only 10% feel that the UK economy is likely to show sustainable growth.
These findings seem hard to reconcile with most measures of economic activity. But the research shows that most people find it impossible to separate the wider economic situation from their own financial situation; the economic environment might be overwhelmingly positive but if they don’t feel it, then they don’t really believe it.
In addition, it appears that the impact of the recession has been so profound, that it has had a lasting impact on consumer psychology, even amongst the many whose personal situation is now fairly positive and those who never really felt its full force.
Consumers might be more interested in dealing with smaller, local businesses but it’s important to recognise that the focus on value for money is just as important. Value brands across the board have lost most traces of stigma and coupon culture appears to be pervasive across all age groups and income brands.
However, the potential threat to the small business that finds it hard to compete with larger players on price is somewhat offset by ongoing strength at the quality end of many consumer markets.
What we can be certain of is the emergence of several new consumer types; the Thrifty Affluent, Bounce Back and Still Struggling segments will have an on-going impact on UK businesses of all sizes.
Smaller businesses, less encumbered with rigid segmentation models and more able to react swiftly to changes in consumer spending habits, could well hope to turn this new order to their advantage.
Copyright © 2015 Duncan Bridge, director of ID Insight Consulting.
It is always easy to be wise after the event, with 20-20 hindsight. Predicting the future, though, is another story. I am reminded of that apocryphal sign: "Palm reading cancelled due to unforeseen circumstances". Even top economists cannot agree on even the biggest aspects of our economic future: are we set for a speedy recovery, or will be in the economic doldrums for a whole 'lost decade'?
The facts are fairly easy. A recession is defined as two successive quarters of 'negative growth'. Over the last year and a half, the economy has fluctuated between quarters of positive and negative growth.
This pattern has given free rein to politicians, the media and just about anyone with a public opinion on the matter to proclaim the recession as ending — continuing — worsening — improving — delete as appropriate. Some say that our current 'anaemic but positive' growth trend is flattered by the Olympics and Jubilee — it is simply too easy to find arguments to point either way.
Worse still, even if the statisticians come up trumps, it is of little use to the business owner. A quarter of a percent here and there on global or national numbers will be of no use in working out the future of your own business, or indeed whether it is a good time to open a new venture.
I think it is more useful to consign the macroeconomic numbers to the bin. As an entrepreneur, I simply refuse to be dissuaded: I look for the green shoots wherever I can, by talking to real people running real businesses. I meet business owners all the time (I mentor several business owners every month), and all of them have different tales to tell of both challenges and opportunities. What unites them is an unfailing commitment to making their particular business work.
Recruitment: an economic bellwether
One industry, whilst hardly a statistically sound example, offering a better benchmark than most is recruitment. The recruitment industry serves other businesses, and when times are tough and those other businesses are cutting back, recruitment services take an exponential nose dive.
Similarly, when confidence begins to return, the recruitment industry wakes up with a vengeance. It is an excellent bellwether of economic confidence. I happen to have spoken to a number of recruitment agencies recently, and indications are good: a definite upturn in certain sectors seems to support the science.
This is of course great news, but as an entrepreneur, I still think we need to avoid the question of recession in the first place. Asking when the recession will end is unproductive; it suggests that our hands are tied until then. A better re-phrasing would be 'Can I succeed despite these conditions?' To which the answer is a resounding 'yes'.
I have spoken before about the many different kinds of entrepreneur but there are some core characteristics that the successful ones all share. A positive outlook, the desire to spot an opportunity in any situation and a yearning to change the status quo would all make the list. In the words of strike-it-rich author Robert Kiyosaki, (not someone I always agree with, but the quote is worth a mention), 'This crisis is the biggest opportunity in the history of the world'.
It is hyperbole, but it is also right: there are advantages to starting up in a recession. Everything is cheaper: rent, equipment, premises and services can all be bought for knock-down rates. Furthermore — and I cannot overstate the importance of surrounding yourself with great people — in a market where big international companies are laying off staff, ever more top-quality people are becoming available in the job market. They are willing to travel further, work harder and for less money than their previous expectations might have allowed.
The benefits of being small
And you have the agility of the startup on your side: you can make decisions on a sixpence, outfoxing bigger companies that are struggling with their legacy systems and infrastructure.
There is a caveat. This opportunity only exists if you are willing to work harder, think faster and be better than the competition. Recession is the Darwinian 'natural selection' of the business world. In troubled times, a bad business idea becomes worse, because it will lose more money, more quickly. A good idea, meanwhile, has to be really good to make it through to fruition. That requires discipline:
David and Goliath
Jamie Murray Wells, the founder of online glasses service Glasses Direct (and an expert guerrilla marketer) once sent a flock of sheep into a branch of Specsavers with placards saying, ‘Don't get fleeced'. That might not be quite your cup of tea, but it earned Jamie bags of press exposure for only pennies. It also gave him the support of the public — us Brits love a David who challenges a Goliath.
A recession forces you to exceed your own expectations. New businesses with a little cash, an entrepreneurial spirit and an emphasis on marketing a well-defined product or service are best placed to turn frugality into a genuine business opportunity.
Copyright ©Mike Southon 2012. All rights reserved. Not to be reproduced without permission in writing. Mike Southon is the co-author of The Beermat Entrepreneur and a business speaker.
The media is full of one story – Government cuts. NHS cuts. City council cuts. All sorts of cuts! In times like these your marketing budget may feel like a luxury and history shows that in an economic downturn, the top of the list of cuts for businesses is marketing. But cut your marketing budget at your peril. Here’s why:
We live in a competitive environment. Brands are competing for attention like never before. Cut your marketing budget and your impact on your target audience will reduce significantly, if not die out because you’ll be swallowed by competitive.
It takes seven touches to move from being unknown into conscious awareness. Let’s use the example of Swirl Printers.
1. Potential client stumbles across the Swirl website from a Google search. They opt in to their e-newsletter.
2. They later receive the Swirl e-newsletter.
3. Then they see a Swirl advert.
4. At a networking event potential client meets a Swirl representative. Potential client takes a Swirl leaflet promo.
5. Potential client comes across the Swirl leaflet promo a few days later and places it in a draw for safe keeping.
6. Another Swirl e-newsletter reminds them of the leaflet promo in the drawer.
7. They visit the website and can quickly find further information on the promo (reinforcing the leaflet). The telephone number is easy to spot and they take action.
Without a marketing budget Swirl Printers would not have had the website, e-newsletter, advert, the representative at the networking event or the leaflet promo.
The seven touch theory also relates to the process of increasing brand awareness. Through those seven touches, Swirl Printers increased their brand awareness to their potential customer. Educating your target audience about your brand takes place through a similar progression of drip fed communications. You’ve got to speak to your target audience frequently so they do not forget your brand.
In a downturn marketing it is even more important than it was before! It is now more than ever that you want to attract customers. Therefore you need to communicate. Since many people stop marketing in a down turn, if you keep it up, or even increase it, you will be at an advantage.
I’m not talking about a million pound budget! I’m suggesting you cover the basics and do it well. You need a simple but effective website that is up to date; some information you can give out on request such as a promo leaflet, booklet or e-mailable PDF; exposure in the form of adverts or articles in relevant magazines, on or off-line; and if your target audience is other businesses then keep networking.
And then there’s the free stuff. They demand some of your time but they do wonders to raise your profile if you add value and are consistent. Use Twitter; blog regularly; get on LinkedIn; write and post articles and press releases; and, offer to speak at relevant events.
These are just a few hints and tips. Don’t follow the trend of cuts, cuts and more cuts. Rather invest in your marketing wisely.