The road out of recession

For many small firms anxious to beat the recession, developing a survival strategy has been one of the best ways to get through the past two years. But not all small firms have gone down the tried and tested cost-cutting route advocated by the experts, as business writer Emma Allen explains

Protecting cashflow and cutting costs have been the biggest priorities for most small firms during this recession - usually using tried and tested techniques like switching energy suppliers to save money, reducing staff headcount or moving to smaller premises

But others have turned to more creative ideas to keep their business going - and in some cases, even flourish - during the downturn. Jo Behari set up Home Jane, an all-female handywoman service during the property boom three years ago.

After a tough 2008, Jo realised she needed to rethink her existing offer. “It was sink or swim time,” she reveals. “I thought, ‘I’ve got a good business model but I need to expand our service if we’re going to survive’.”

Bring in extra revenue

Jo’s solution was to launch a series of DIY evening courses aimed at women. Six months on, she says the classes have proved successful in several ways. “Not only have they brought in valuable revenue, but it’s allowed us to go out and chase a different audience,” she explains.

“It’s also brought in new customers for the main business - we’ve probably picked up two or three new clients from each class. And by saving people money by teaching them how to do the small jobs themselves, they now come to us for bigger projects.” 

Extend your brand

Jo now plans to add further to her offer by launching a “decluttering” service next spring and a parent package aimed at getting a house ready for a new baby.  “For me, it’s about moving the business forward and growing the brand,” she stresses. “A lot of our customers are female and it was a question of looking at what else would fit.”

Crucially, the innovations are costing the business very little. “The main thing is that these services complement what we already do, so there’s little investment needed,” Jo points out.

Actress Jane Asher is another business owner who 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 points out. “You may need to step sideways, according to the market you find yourself in.”

Take time to assess the risks

Before you take a new direction, though, it is advisable to do some careful 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 is a long or short-term option, and if there will be sufficient demand when the economy picks up.

Not all businesses have the potential to explore new markets, though. At Cantifix Architectural Glass, a high-end London-based glazing specialist, beating the recession has been about long-term thinking and driving sales from existing contacts rather than pursuing new ideas. Instead of paying for advertising, the company has stepped up its sales strategy, replacing telephone sales calls with personal visits to business customers to increase conversion rates.

“We’ve become much more aggressive with our sales tactics over the past year, in order to emphasise our quality against competitors,” explains chairman Charlie Sharman, who says that the firm has also carried out a recruitment drive, taking on several new senior sales people from rival companies. “The quality of people out there is much higher than normal and we’re trying to plan for the next ten years, not just tomorrow,” he says.

For Charlie, survival is also about getting ready for the upturn: “All businesses need to think about how well placed they are for 2010, which is when things are likely to pick up.”