Many small firms today have come through a prolonged period of economic hardship. So how did they survive? Emma Allen talks to small business owners that diversified and refocused in order to ride out tough times
Protecting cashflow and cutting costs are normally the first priorities during difficult times - using tried and tested techniques like switching energy suppliers to save money, reducing staff headcount or moving to smaller premises.
But others turn to more creative ideas to keep their business going - and in some cases, even flourish.
Actress Jane Asher has first-hand experience of thinking creatively during a tough market. Having set up Jane Asher Party Cakes in the early nineties, she has since become well known for her bespoke cake designs. But when she found herself struggling, she diversified by setting up a tea room and selling sugarcraft accessories.
“You can’t always assume that your core business is the only one you’re going to be running,” Jane says. “You may need to step sideways, according to the market you find yourself in.”
Before you take a new direction, though, it is advisable to do the necessary research. “This is particularly the case if you are planning to invest in a new product or service,” warns Clive Lewis, head of SME issues at the Institute of Chartered Accountants England and Wales.
“Ask yourself what the risks are, as well as the potential gains. While it’s good to be innovative and flexible, the more you step outside of your core markets, the more vulnerable you will be.”
Lewis suggests talking to customers and key suppliers before you take the plunge. “Not only can you find out whether your new offer will be useful to them, but you might pick up a valuable order,” he points out. Consider too, whether your new product or service has long-term potential once the market picks up.
Not all businesses have the potential to explore new markets, though. At Cantifix Architectural Glass, a high-end London-based glazing specialist, surviving was about long-term thinking and driving sales from existing contacts rather than pursuing new ideas. Instead of paying for advertising, the company stepped up its sales strategy, replacing telephone sales calls with personal visits to business customers to increase conversion rates.
“We became much more aggressive with our sales tactics, in order to emphasise our quality against competitors,” explains chairman Charlie Sharman, who says that the firm also carried out a recruitment drive, taking on several new senior sales people from rival companies. “The quality of people out there was much higher and we’re trying to plan for the next ten years, not just tomorrow,” he says.
For Charlie, survival is also about exploiting the first signs of an upturn: “All businesses need to think about how well placed they are as soon as things start to pick up.”