K&H have recently participated in a survey by RAN ONE into the effects of the credit crunch on small businesses around the world. At the same time within K&H we have been doing our own informal survey of our clients’ experiences of the downturn. Here are my reflections on the findings of both.
Firstly, here are some of the main findings that I picked out of the RAN ONE survey*
As a result of the credit crunch these are the percentages of relevant businesses who said they “agree” or “strongly agreed” with the following:
63% – Harder to make sales
71% – Facing more price pressure
89% – Looking for increased internal efficiencies (though only 30% will defer IT expenditure)
59% – Expecting lower pay rises of staff
70% – Customers taking longer to pay
49% – Forecasting profits to fall
39% – owners giving personal security for borrowings
41% – businesses with no alternative source of funding
33% – staff/team concerned about the viability of the business
Some of the actions that come out of this are obvious (sell more, get cash in sooner, cut costs etc) and your inboxes are probably full of suggestions along these lines.
Here are some of the less obvious actions that you may be able to take and other useful opportunities that the above may present:
- Does your business provide services/goods that may help others to make improvements in these key areas? If so, can you use data such as in the RAN ONE survey to help you quantify the benefits (in hard cash terms) of using your services?
- If your team are concerned about the viability of the business, are you communicating with them to reassure them? Even if they have a good cause concern, they will probably have inflated how bad things are in their minds if you haven’t kept them informed.
- Ask your team for their suggestions about improving efficiency and helping the business generally. Use the forum of regular team meetings if you don’t hold them already.
- If business is slow, use the time this frees up to work more ON the business, eg writing systems, doing business plans, building the brand, training the team, etc.
- Try increasing your prices! This is counterintuitive I know, but if everyone else is chasing the discount end of the market, maybe there are better opportunities at the premium end.
- Don’t let personal pride get in the way of making hard business decisions like closing your business down. If you can’t borrow to prop it up, consider starting again from a much leaner base and possibly with a new business model.
- To win new business, offer extended credit perhaps with interest charges built in to your pricing (but only if bad debt risk is minimal and if you are cash rich enough)
Please let us know how you interpret the findings and your opinions about what action should be taken.