Brexit, Interest Rate Cuts, rise in inflation, Quantitative Easing, de-valuation of the pound, downgrade of growth forecasts, rise in unemployment; in the last few weeks we’ve heard it all. The turmoil in the UK Markets following the Brexit vote has resulted in an unprecedented amount of uncertainty especially in UK businesses.
Today, for the first time since 2009, the Bank of England again cut UK interest rates, this time from 0.5% to 0.25%. This is a record low for the UK and an attempt to stimulate the UK economy and it may not be the last cut we see this year. Further measures have also been introduced via the Term Funding Scheme which will encourage banks to forward the lower rates on to customers.
So what measures should you be taking to ensure your business makes it through a possible recession – a minimum of 2 quarters of negative growth?
This is never a good decision to make as it involves laying off staff. However, this may not always be necessary. Before contemplating reducing headcount, you need to sit down with your senior team and review the current inefficiencies in your business.
For example, can the current work be done by a smaller more efficient team? If this is agreed, then you will need to review staff performance to ensure key staff members are not affected. Rather than laying off other staff members you could consider offering them part time positions or contracts with reduced hours.
Whatever your decision, this is a highly sensitive area and needs to be handled very carefully.
Reduce Business Expenses
Where your team may have travelled business class before, this now needs to be reviewed. Can the same job be done via economy class travel? Further, when staff are visiting clients, can a car share arrangement be utilised if more than one staff member is visiting. Expenses including overnight stay and food allowances during business trips should be reviewed also.
Are there other areas in the business where you can reduce expenses too? Do you need to have monthly company socials? Can you reduce paper and printing expenses and improve your carbon footprint at the same time? Can better deals be negotiated with your suppliers?
A thorough audit will assist you in making the right decisions when it comes to reducing business expense.
Review Marketing Expenditure
In a recession, you may feel that you need to reduce marketing spend. However, this is the exact opposite of what you should be doing. Cost savings in other areas should be applied to a more effective marketing strategy.
It’s a given that businesses will go bust during a recession. You need to ensure your message continues to get out there regardless of what’s happening in the economy. With a continued marketing push, you will notice a growth in business during a recession as some of your rivals may no longer be able to compete.
And remember, what you do today, will affect your business tomorrow. Maintain your marketing effort and you will reap the results in months to come.
If you would like to discuss the possible impact of the recession on your business please call us on 01902 42 2020 and we’ll guide you in the right direction. We’re professional chartered accountants and business advisors and have many years of business experience.
Alternatively, you may complete the contact form on our website by clicking here: I’m a business looking for some business advice from an accountant.
You can also email us: firstname.lastname@example.org.
Appleby Mall, Chartered Accountants, here to ensure your business achieves the success that it truly deserves regardless of the economic climate.