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Blog posts tagged recession

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Are we finally coming out of recession?

January 10, 2013 by Mike Southon

Are we finally coming out of recession?/recovery and recession{{}}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.

Opportunity knocks

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:

  • Focus on your core offering and hone it until your niche is crystal clear. Do not try to cover inadequacy with more layers of extra services: get your main service right until you are delivering right at the top of your game.
  • Look after your existing client list. Chasing new business can be costly (generally it costs six times as much to find new clients as to service existing ones); so give your top clients unstintingly magnificent service.
  • Pick at least two of these three: be local, reliable and nice. If you are round the corner, move heaven and earth to deliver great service and become a dependable source of knowledge and inspiration, you will rapidly earn an enviable reputation.
  • Do not cut back on marketing. It is not expendable during a recession, rather, it is vital. Now, more than ever, you need to be shouting about what you can do and the wonderful way you do it. With minimal budgets, be creative, innovative and brave — all attributes that would also appear on the list of successful entrepreneur characteristics.

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.

 

Reversing the decline of our high streets

December 17, 2010 by Rachel Miller

You don’t have to look far to see concrete signs of the recession hitting small businesses hard. Walk down any UK high street and the empty shops say it all.

But boarded up shops is one thing — the danger is that they could soon become piles of rubble as unused properties are demolished to avoid paying rates.

Parliamentary under-secretary of state Bob Neill has announced this month that the government is to take an extra £400m per annum from businesses next year, by scrapping business rate relief given to the owners of empty properties.

But don’t blame us, says Neill.

"This is a Labour tax,” he says. “There are many Labour taxes that we would like to scrap, but we are simply unable at this point because of the disastrous fiscal legacy left by Labour. But we are taking action to tackle problems with business rates — such as scrapping Labour's retrospective ports tax and by increasing small business rate relief."

In fact, Labour introduced this tax in order to encourage regeneration schemes before the recession took hold. Obviously, this “incentive” to keep business premises occupied could not compete with the global recession.

So will we really see businesses bulldozing their own premises to avoid rates?

It’s happening already according to the British Property Federation. What it calls the “bombsite Britain” tax has led to millions of square feet of property being demolished since its introduction two years ago.

There are plenty of empty premises, that’s for sure. According to the Local Data Company, 13 per cent of all town centre shops are now lying vacant. The majority of the boarded-up blackspots are in the Midlands and the North with a shocking 29 per cent of all businesses in Blackpool closed up.

Napolean Bonaparte called us a nation of shopkeepers. The fact is that our high streets reflect the state of our nation and it doesn’t look good — some are turning onto ghost towns, others are high street clones with few independent stores.

So what can be done to encourage more enterprise on our high streets?

People power is one way. Pop-up shops, cafes and galleries are moving into empty premises and using them to improve community life. By starting small, many projects have been able to get off the ground. Some have turned into permanently successful going concerns — like the Dock Kitchen in West London which was set up in the old Virgin recording studios complex.

But pop-up shops aren’t going to save the high street single-handedly. Even economic recovery may not immediately change the fortunes of our shop-keepers, according to the British Retail Consortium. Director general, Stephen Robertson, has said: "Many of the problems of town centres have more fundamental causes than simply the economic slowdown. High street shops are often battling to pay big bills for business rates and rents”.

The BRC has called for a moratorium on business and property rates. Certainly, national and local government have to find ways to reduce the barriers that stop entrepreneurs setting up businesses on our high streets — from business rates to planning and even parking.

Something’s got to be done — before boarded-up Britain becomes bombsite Britain.

 

Are you the office Santa or more like Scrooge this Christmas?

December 16, 2010 by Alex Pratt

We all have good years and suffer tough ones, but Christmas comes in all economic conditions. It's like a lifelong census of your approach and attitude, and says much about you as a leader.

In austere times when staff may have been let go, wages frozen or cut, and profits and cash placed under pressure, it can on the surface appear a good idea to avoid the costs of the Christmas bash. Let's face it, many of us do find it a bit cringeworthy to watch Brenda from Accounts Receivable suddenly hyperactive and over friendly on Egg nog (what actually IS egg nog? Does anyone know?).

But the truth is you need your team firing on all cylinders in difficult times. They are your biggest cost and you need more from less if you are to improve your profitability. If you cut Christmas and the water coolers you'll look not only look petty and run the risk of annoying even your best and most loyal people, but you'll panic your entire team into insecurity, which is bad for morale, bad for productivity, and bad for profits. Leaders lift horizons and spirits. Losers wallow in the recent past.

What does it say about you if you won't invest the equivalent of a couple of hours worth of pay in saying "thanks guys"? And not to celebrate the survival of your remaining crew to this point in the most treacherous economic storms known to man because you've lost a few overboard is weak leadership. In tough times you need to lift horizons and stay to task, not wallow in the inevitable imperfections of the journey. Business is a challenge worth doing because you can lose. Celebrate those who have left as if martyrs to the business cause.

There's no sin in a laugh. Think back to the war years when times were really austere and remember that humour helped us come through. 

So, don't cut back on Christmas. Don't let tough times of the politics of different religions convince you to reign back. Celebrate - we could all perish in an asteroid collision tomorrow. Count your blessings at this time of year, not your excuses. 

Above all never miss an opportunity to say "thanks" and to raise horizons. These two simple traits separate the Gandhis from Gordon Gekkos, Greed is not good. Generosity is great!

Alex Pratt is an entrepreneur and the author of Austerity Business.

 

Win a copy of Alex's book, Austerity Business!

Alex has given us a copy of Austerity Business to give away to a lucky Marketing Donut reader. All you have to do is leave a comment below telling us what you're doing to thank your staff this Christmas. We'll put all the commentators' names in a hat and pick one out on Thursday, 23 December to receive the book. Get commenting!

Entries will only be accepted via the Marketing Donut website. You can enter by leaving a comment on this blog post telling us how you're thanking your staff this Christmas. To leave a comment, you will need to sign in or register to set up an account. Registration is completely free. Multiple comments from the same user will only be entered once. Comments will only be published at our discretion and no links will be allowed. Inappropriate or offensive comments will not be published. Comments submitted between Thursday 16th December and Thursday 23rd December 2010 (17:00 GMT) will be entered into a draw and a winner will be picked at random. The winner will be contacted on Thursday 23rd December using the email address they provided when they registered on the Marketing Donut. If the prize is not claimed by Monday 10th January 2011, another winner will be selected. We will post the prize to a UK address in January 2011. The prize is one copy of Alex Pratt's book 'Austerity Business', there is no cash alternative.

What shape is your recession?

July 12, 2010 by Simon Wicks

As a writer/editor, I have a vested interest in the way people use the written word. With the Donut sites (and our other small business offerings), for example, we editors encourage all of our house writers and external contributors to write in a clear, straightforward way.

Jargon doesn’t help anyone, except the select group of people who speak it. Likewise, unnecessarily long words or complicated phrases are both barriers to clear communication. When you write for a general audience, as we do, you can’t afford to lose them because you’re speaking the wrong language.

Unfortunately, the business world loves a bit of jargon. Why spell things out when you can come up with a smart-sounding phrase that makes you look like you belong to the club? What amazes me is how quickly these things are picked up and how readily people use them without really thinking about what they mean or whether they are even making sense.

Last week , a colleague interviewed a spokesman from a well-known small business body, who suggested that we were experiencing an ‘L-shaped’ recession. I’ve heard about a ‘W-shaped recession’ before, which at least is reasonably self-explanatory – although the alternative phrase, a ‘double-dip’ recession, is a bit clearer.

But an ‘L-shaped’ recession? Does this mean a total economic collapse, followed by a period of zero-growth? Surely not, because the reality is very different. Perhaps this person meant an ‘L-on-its-side, a-bit-like-a-tick’-shaped recession - ie a rapid fall followed by a slow climb back to where we were before. Something like this, I suppose (though with a shallower tail):

To make things even more confusing, he went on to say that instead of a “double-dip” recession, we ought to watch out for the “triple tumble”. Now, I don’t know about you, but I’ve always associated tumbling with gymnastics. So I had a vision in mind of a young woman hurling herself across the floor, bouncing and flailing, legs and arms akimbo, before finally coming to rest – miraculously – on her feet.

Are we really saying the economy is like a gymnast? I’m sure we’re not, because what on Earth would happen if the gymnast took to swinging around the parallel bars? Would that be an ‘O-shaped’ recession?

There’s a lesson here. Keep it clear, keep it simple, say what you mean. And if you don’t really know what you’re talking about, just admit it. There’s no shame in that. Let’s face it, nobody has made any reliable predictions about the economy in the last three years, so why do we keep pretending we can?

Social media - the Business Pulse adrenaline shot

October 21, 2009 by James Ainsworth

This year's Small Business Week kicked off with the results of the latest Business Pulse Survey conducted by BT and their associated partners. Over 7,000 small businesses took part and the findings indicate a level of optimism to the tune of 75 per cent expecting to see an end to the recession by the close of 2010. The remaining 35 per cent are even more upbeat and state we will be clear of it at the start of next year.

One of the reasons for such optimism is the availability and vast improvements in technology for business. The bigger technology picture that we can draw from the survey findings detail that 61 per cent said that faster broadband speeds had had a positive impact on their business. 40 per cent said that better websites and ecommerce were benefiting them. 

But for me, that isn't the best bit, oh no.

As a keen advocate of social media, it is encouraging to see this relatively recent addition to the marketing toolbox appear in the survey results as something which has registered on the radar of small businesses and is seen to be having a positive effect on their performance.

The stat that vindicates the banging of the social media drum reads as follows: '19 per cent of those questioned for the Business Pulse Survey said that social media, forums, Twitter, Facebook, etc, were having a positive effect.' The significance of this is that the need for such a statistic did not exist 12 months previously. Social media as a means of small business practice is on the up.

Having recently attended the Like Minds conference in Exeter, which examined the return on investment from social media, the support and need for social media business practices to be part of the small business agenda is ever increasing and it will be the innovative small firms which will capitalise on making the most of available technologies and be the wealth creators of the country.

Come on you Twits! Get on your Facebook and let's blog our way out of the recession

September 08, 2009 by James Ainsworth

In a downturn, it isn’t just small businesses that look to make their pennies stretch further or spend more time investing time resources into ‘free’ marketing opportunities but they certainly have a greater opportunity to do such things. If trade is down and money is tight, things might look bleak and the marketing resources cupboard somewhat bare.

One way that you may choose to keep on top of your marketing activities, even if the budget has run out, is to try out something that requires little or no money (beyond buying a computer and internet connection). Social Networking or online media resources are a great way to make use of your time in an inexpensive manner in order to drum up trade and to make sure your business is ‘out there.’

If you are unfortunate enough to have less footfall than you are accustomed to in headier times, you may be in a position to spend more time on Twitter, Facebook and any of the hundreds of online community sites where you can promote, network, converse or establish your brand and make real connections. If you do this well you may see that trade picks up again and so you have less time to commit to online activities as you are dealing with fantastic customers making purchases. When trade does pick up once again, does online marketing through social networking have to give?

I believe in the cliché that tough times make us stronger but beyond that I anticipate that this recession has rewritten the rules of small business marketing and the online marketing model of the future will see social networking as a standard practice in advertising for small firms. When the tills are ringing again and the ‘R’ word is but a distant memory, try and set aside short and frequent bursts of online marketing activity, be it Twitter, Blogging or Facebook, for great results long-term.

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